Real Estate News | Vacation & Leisure Real Estate
Wells Fargo Starts Foreclosure Fight Against Loews Lake Las Vegas
By Alex Finkelstein | June 5, 2009 9:00 AM ET
(LAS VEGAS, NV) -- As hotel foreclosure fights go, this one is a bit peculiar.
On the one hand, New York City-based Loews Hotels acknowledges it cannot pay off a $117 million loan to San Francisco-based Wells Fargo Bank.
At the same time, Loews is pressing to keep its 493-room, 10-year-old Loews Lake Las Vegas resort open and operating, but says the property's owner of record, LLV Hotel LLC, has no money to keep the resort going.
On the other side, the bank has told a Clark County District Court judge it already has provided Loews with $581,000 in operating funds, on top of the $117 million loan, through its CWC Capital Asset Management loan servicing company.
Loews argues in a court filing the $117 million debt is moot since it is willing to transfer its interest in the property to Wells Fargo, but wants to continue operating the hotel through its L.H. Investments LLC of New York City.
However, Wells Fargo wants the court to appoint a receiver to manage and maintain the property.
Loews concedes it holds only a minority ownership interest (25 percent) in the property. A so-far undisclosed private investor has the majority interest (75 percent). The partners bought the property from Transcontinental Corp. in 2006 when it was called the Hyatt Regency Lake Las Vegas Resort.
Wachovia initially loaned the funds to Loews to make the hotel acquisition. Wachovia has since been acquired by Wells Fargo.
The property includes 110,000 square feet of meeting space, waterfront views of Lake Las Vegas, a spa, gym, four food and beverage outlets and two pools.
The Las Vegas Sun reports Standard & Poors first spotted the cash flow problems at the resort last year. Increased cancellations and fewer group bookings soon surfaced.
When Loews and its partner purchased the resort in 2006, average daily room occupancy stood at 68.8 percent. Average daily revenue per available room was $133.14 in the previous 12 months, according to S&P.
But between October 2007 and October 2008, occupancy had slipped to 55.5 percent and revenue per available room fell to $103.77, the credit rating agency said.