Anaheim Hotel Sold by Trustee for $26M
Portofino’s Former Owner Defaulted on $36M Loan
By Lou Hirsh
The 190-room Portofino Inn & Suites hotel in Anaheim, CA has been sold by a trustee for $26 million, after its prior owner defaulted on a $36 million loan on the property located at 1831 S. Harbor Blvd. The hotel remains open for business.
Title documents indicate that the property’s ground lease and structures were acquired in a December trustee sale by a limited liability company in Maryland affiliated with CW Capital Asset Management LLC. Bethesda-based CW Capital is a special-services and asset management firm focused on transactions related to financially distressed properties.
The hotel was originally built in 1978 and is located about a half-mile from Disneyland. The property’s ground lease and structures on the land had been owned previously by SDRP I LLC, a Delaware limited liability company, via a loan taken out in 2007
Documents indicate that SDRP, as of July 26, 2017, owed $36.33 million on a bank loan with an original balance of $36.75 million. The unpaid balance on the principal came due on May 11, 2017, and the trustee sale took place in lieu of a bank foreclosure.
The hotel’s former owners were not immediately available for comment.
Alan Reay, president of hotel brokerage and research with Atlas Hospitality Group in Irvine, CA told CoStar News that Portofino Inn & Suites had shown no outward problems related to unusual vacancy or performance issues. In fact, financial distress has become a rarity for Southern California hotels in a national economy that remains friendly to travel and tourism, especially near visitor hubs like Disneyland.
“To have a Southern California hotel foreclosed on is really an anomaly,” said Reay, whose firm was not involved in the disposition of the Portofino property.
A recent California hotel development report by Atlas noted that the Golden State set a new record for hotel rooms opened in 2017, with the 10,793 newly-built rooms edging out the previous high of 10,286 rooms opened in 2008.
Reay’s firm pointed to several factors spurring new development in the region, including the availability of construction and long-term financing at attractive rates, and continued growth in profitability and revenue per available room (RevPAR) for existing hotels. There is also strong interest from overseas investors, especially from China.
Six Orange County hotels with 960 rooms opened in 2017, down 47 percent from the seven hotels with 1,808 rooms that opened in 2016. Orange County has eight hotels with 1,657 rooms currently under construction, the largest of which is the 613-room Westin Anaheim Resort. Orange County also has 57 hotels with 11,184 rooms in planning – up 27 percent from a year ago in room count.