March 22, 2010
Westbrook Partners has moved in to the aid of Millennium Partners, including the San Francisco Four Seasons which was in foreclosure. The deal is seemingly a good one for Westbrook but what this deal signals is that the market was shifting. Banks, which for some time were unfit and/or unsure of what to do with foreclosed properties were holding off on taking deals back and were letting things go. Sellers at the same time were having difficulty coming to grips with reality and thus the market was stalled.
As the market starts to turn, it is the banks that may prove to be in the best position to force workouts. Owners facing a some or nothing dilemma have been and will increasingly be cutting deals to save their properties, thereby eliminating debt and helping the banks out at the same time.
Mixed-use developer Millennium Partners LLC has sold a two-thirds ownership interest in three of its luxury hotels to real-estate investor Westbrook Partners LLC for $100 million, in a deal that saves the Four Seasons San Francisco from possible foreclosure.
As 2009 progressed, the Four Seasons San Francisco started to post better results, thanks to the nascent economic recovery and to cost cuts Millennium arranged with the hotel’s operator, Four Seasons Hotels and Resorts, based in Toronto. By this year’s first quarter, the hotel’s occupancy had improved to 82%. Millennium now foresees the hotel ending this year with a $2 million gain in net operating income.
Deciding that the hotel was worth keeping rather than forfeiting to LNR, Millennium brought in Westbrook as its partner and then opted to do so at the Miami and Boston properties. The two now will seek to buy other distressed hotels, with Westbrook providing most of the capital and Millennium operating the new acquisitions. Mr. Jeffries declined to say how much capital the two are dedicating to buy additional properties.
The WSJ indicates the deal transacted at $300K per key, which is a pretty sweetheart deal for AAA Class hotels in 24/7 markets.
Meanwhile, the Four Seasons in Maui has missed a payment and is seeking to restructure debt…
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