1st lender now owns Tapatio Cliffs site

The original lender in the foreclosure of Pointe Hilton Tapatio Cliffs Resort and its adjacent golf club took ownership of the north Phoenix property following its Dec. 29 auction after the resort's former owner defaulted on a $55.2 million loan.

C-III Asset Management LLC, the beneficiary, became the property's owner after no one placed a starting bid of $51 million. The beneficiary then formed Top24 - 7th Street Phoenix LLC.

Details about the Delaware-based company were unavailable. Officials from C-III Asset Management did not respond to interview requests Wednesday.

Despite the switch in ownership, Hilton Hotels Corp., which manages the Pointe Hilton Tapatio Cliffs, says operations will be unaffected.

"Nothing will change as a result of the new ownership. It will still be Hilton management, Hilton brand - business as usual," said Ron Simon, the resort's general manager.

The starting bid of $51 million dollars is about 40 percent less than the $85 million HH Tapatio Phoenix LLC, a McLean, Va.-based subsidiary of Highland Hospitality Corp., paid for the resort at 11111 N. Seventh St. in 2006.

The loan was securitized, meaning it was sold off as shares to investors.

"Property values now are half of what they were three or four years ago," said Bill Murney, senior vice president at HREC Investment Advisors.

"When no one shows up to bid, the property appears to be valued at more than what it's worth," Murney added.

In some instances, that has left banks and the limited-liability corporations they've formed with no choice but to act as default property owners until market conditions improve.

Under those circumstances, the question is not if, but when, banks will sell the properties to try to recover losses, Murney said.

In the case of the Intercontinental Montelucia Resort and Spa in Paradise Valley, former owner and developer Crown Realty & Development Inc. defaulted on a $180 million loan in 2009.

When Crown tried to place a $120 million bid on the property at its auction, Eurohypo AG, the German bank that issued the loan, countered with the winning offer of $122 million.

The bank has maintained ownership since, although in 2010, the bank hired Warnick and Co., an asset-management firm, to find a new buyer.

For hotels and resorts, the real-estate market likely will warm up this year, Murney said.

"Everyone's projections are that occupancy and rate will grow in 2011," Murney said. "The improvement in revenue and the ability to raise rates will show up in the real-estate market. They go hand in hand."

Greg Hanss, director of sales and marketing at the Montelucia, said, "Any development that occurred in the hotel industry in 2002 through 2008 is probably at risk of having to restructure its financial debt. The (Tapatio Hilton) hotel will continue to operate business as usual, as we did."

The 584-suite Pointe Hilton Tapatio resort and its golf club, the Pointe Golf Club on Lookout Mountain, received a notice-of-trustee's sale from lender Bank of America on Aug. 23.

The then-property owner defaulted on a $55.2 million loan with the now-defunct Bear Stearns Commercial Mortgage Securities Inc.

by Megan Neighbor The Arizona Republic Jan. 6, 2011 12:00 AM





1st lender now owns Tapatio Cliffs site