Court sets May schedule for sale of 15 hotels, including two in Bay Area

https://www.mercurynews.com/2021/03/25/real-estate-bankrupt-bay-area-hotel-auction-covid-queen-mary/

SAN JOSE — A bankrupt hotel chain has won court approval for the sale of more than a dozen U.S. hotels, including two in the Bay Area, whose finances crumbled beneath economic blows that the coronavirus unleashed.

The auction of the hotels is scheduled to be completed by the end of May and a private investment firm has been picked as a “stalking horse” to set a minimum bid for the 15 hotels involved in the sale, according to a bankruptcy court order.

The Bay Area hotels due to be auctioned off in May are the Four Points by Sheraton at 1471 N. Fourth St. in San Jose and the Holiday Inn & Suites at 330 N. Bayshore Blvd. in San Mateo, according to documents on file with the U.S. Bankruptcy Court.

The minimum price for the package of hotels is $470 million, the court files show.

Monarch Alternative Capital is the bidder-to-beat in the auction. Monarch Alternative is a private investment firm that specializes in owning bankrupt companies and properties and delinquent debts.

Bids that might top Monarch Alternative’s court-established price of $470 million for the entire package are due to be submitted by May 14. The auction is slated to be held on May 20. The auction’s ultimate winner is scheduled to be approved by the court on May 28.

Eagle Hospitality Trust, a unit of a Singapore-based real estate firm, filed for bankruptcy in January.

The court papers show proposed purchase prices for several of the hotels.

Four Points by Sheraton in north San Jose has a proposed purchase price of $33.5 million, court records show.

Although two of the hotels are in the Bay Area, the most high-profile lodging in the auction package is the Queen Mary, a one-time cruise ship that was converted to a floating hotel in the 1970s and is now docked in the Long Beach harbor.

The economic upheaval ushered in by the coronavirus has caused difficulties to engulf several Bay Area hotels, triggering bankruptcies, mortgage defaults, and delinquencies involving huge financing packages.

At present, the hotels in the Bay Area known to be in financial distress of one variety or another include:

— Fairmont San Jose, an 805-room hotel in downtown San Jose. Bankruptcy.

— Hyatt House Pleasant Hill, a 142-room hotel in Pleasant Hill. Delinquent loan package.

— Hyatt House Pleasanton, a 128-room lodging in Pleasanton. Delinquent loan package.

— Club Quarters Hotel, a 346-room hotel in San Francisco. Delinquent loan package.

— Hotel Avante, a 91-room lodging in Mountain View. Mortgage loan default.

— Wild Palms Hotel, a 208-room hotel in Sunnyvale. Mortgage loan default.

— Four Points by Sheraton, north San Jose, 196 rooms. Bankruptcy case.

— Holiday Inn Hotel & Suites, San Mateo, 220 rooms. Bankruptcy case.

— Park James, Menlo Park, an upscale boutique hotel with 61 rooms. Mortgage loan default.

Despite widening vaccinations, it could be some time before the hotel sector regains its footing and recaptures its peak activity levels of late 2019 and early 2020, warned Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks the California lodging industry.

“I haven’t seen anyone who is feeling good about returning to the pre-COVID levels until 2023 or 2024,” Reay said.