St. Regis Monarch Beach Resort Sold to Washington Real Estate Holdings

by Jessica MCILHINNEY on April 8, 2010

Washington Real Estate Holdings, a Seattle investment firm, has bought the St. Regis Monarch Beach Resort in Orange County, California. The company said on Tuesday that they have taken control of the Dana Point 5-star resort and golf course.

Its previous owners refinanced the hotel in 2007, at the top of the market, which loaded it with debt that became a burden when the recession started. The $230 million senior mortgage was held by Washington Holding and Prudential, while Citigroup held a $70 million secondary loan.

The property became popular in 2008 when AIG (American International Group) sponsored a luxury retreat there only days after receiving federal funding. After the so-called AIG effect, group bookings at the hotel slumped. The St. Regis was then hammered during the recession, along with many other hotels.

Then last July Citigroup took the title due to their loan being a default. The group then had to make payments on the senior loan since it was the new owner. After negotiating with Washington Holdings, the title was sold on Monday, while Citigroup made about $5 million after everything.

Not all of the details have been reported, but its understood that the transaction was valued at $235 million in debt and cash. Now Washington Holdings has to settle a $40 million mezzanine loan with an unnamed source, as well as a $165 million mortgage with Prudential.

Washington Real Estate Holdings chief executive Craig Wrench says that this hotel just had too much debt on it, but other than that, it’s a perfectly successful, viable and fabulous property. The investment firm expects to give it some tender loving care, he added, as it’s in amazing shape.

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