The number of hotel and resort foreclosures in the Valley continues to increase.
Four more large properties have been served with notices of trustee sale, and the venerable Camelback Inn, a JW Marriott Resort & Spa, has been notified of a $2.7 million mechanics lien, according to information provided by
Four properties are facing auctions:
• Xona Resort Suites in < ?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />
• Carefree Resort & Villas.
• Embassy Suites Phoenix-Airport.
• Crowne Plaza Phoenix in north
All four hotels remain open and are accepting reservations, but it’s unknown how foreclosure proceedings will affect their operations.
Spate of foreclosures
Since the first of the year, the Valley’s hospitality industry has been rocked with bad news.
The developers of the W Scottsdale hotel and the InterContinental Montelucia Resort & Spa in
The foreclosure sale for the Montelucia is scheduled for June 29, and the sale for the W is scheduled for July 2.
Also on tap is the auction of the historic Wigwam Resort & Spa in
Not so Carefree
The latest batch of foreclosures includes the Carefree Resort & Villas. Formerly the Carefree Inn, it was built in the 1960s.
For Carefree Mayor Dick Schwan, the resort’s financial situation reaches far beyond nostalgia.
“We’ve got about 10 providers that give us our sales tax and most of our (operating) revenue, so we’re very familiar with what’s going on,” he said.
He and other town officials have been aware of the problem for several months. The owner, Carefree Mule Train Ventures LLC, is in bankruptcy, he said.
“Within the last several days, we’ve learned that the Chapter 11 has been converted to Chapter 7. We understand the resort is now operating under a receivership,” Schwan said.
Chapter 11 allows a company to reorganize, while Chapter 7 involves liquidation of assets.
The LLC, which is identified in the trustee notice as a
“Our understanding is that the Carefree property has a positive cash flow … and that the receiver is looking for a buyer,” he said.
‘A double whammy’
Buyers are hard to find, but that doesn’t mean some aren’t standing by to take advantage of select distressed properties, according to Rod Apodaca, managing director of PKF Capital Markets in
Apodaca said plenty of money is waiting on the sidelines for the right time and the right property.
PKF specializes in the hospitality real estate industry and is familiar with the
“
Hotel developers from
In those cases, construction loans became due and the developers were unable to find permanent financing in the dwindling credit market.
Other hotel properties have become vulnerable as owners took on new debt in 2006 and 2007 and now are unable to service that debt because business travel and tourism have dropped dramatically during the recession, Apodaca said.
He said the combination of debt servicing costs and declining occupancy has created “a double whammy.”
That could be the issue for the Camelback Inn, which recently completed a $50 million renovation.
According to a mechanics lien filed June 10 in the Maricopa County Recorder’s Office, Graycor Construction Co. Inc. of
The lien is filed against the original contractor, Marriott International Design & Construction Services Inc., in association with the owners, Camelback Inn Associates Ltd. Partnership, Camelback Properties Inc. and Marriott Condominium Development Corp.
Clark Albright, marketing director of the Camelback Inn, said an audit is under way and he expects a resolution to the lien soon.
Get Connected
Ion Data: 480-831-6677
PKF Capital Markets: www.pkfcapital.com
Recent Hotel Foreclosures
Xona Resort Suites
Owner: W2005 RSI Realty LLC, New York
Address: 7677 E. Princess Blvd., Scottsdale
Original loan balance: $95 million
Notice filed: June 18
Auction scheduled: Sept. 18
Carefree Resort & Villas
Owner: Carefree Mule Train Ventures LLC, San Francisco
Address: 37220 N. Mule Train Road, Carefree
Original loan balance: $18 million
Notice filed: June 11
Auction scheduled: Sept. 18
Crowne Plaza Phoenix
Owner: CP Phoenix Holdings LLC, Chicago
Address: 2532 W. Peoria Ave., Phoenix
Original loan balance: $21.1 million
Notice filed: May 29
Auction scheduled: Aug. 31
Embassy Suites Phoenix-Airport
Owner: Saunders of Phoenix LLC, Tucson
Address: 1515 N. 44th St., Phoenix
Original loan balance: $26.5 million
Notice filed: April 21
Auction scheduled: July 28
Source: Ion Data, Mesa
