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Loan backed by Park Hyatt Aviara Resort in default

In what has become a familiar refrain, a $186.5 million loan backed by the Park Hyatt Aviara Resort in Carlsbad has gone into default.

According to the RealPoint LLC credit rating company, the loan is a month delinquent and has been transferred to a special servicer.

Horsham, Penn.-based Realpoint said the 329-room resort, which up until recently was known as the Four Seasons Aviara, had $382,910 in negative cash flow for the 12 months ended March 31. The hotel reportedly had posted $3.1 million in net earnings in 2009 and $11 million in 2008.

A venture including Broadreach Capital Partners and Maritz Wolff & Co. owns a majority stake in the Aviara.

The RevPAR (revenue per available room) numbers for luxury hotels have been particularly ugly during the past 18 months. RevPAR at U.S. luxury hotels plunged 24 percent in 2009, the most of any industry segment, according to Smith Travel Research Inc. That has meant an increasing number of defaults.

In March, Fifth Avenue Partners defaulted on a $73 million construction loan secured by Hotel Se at 1047 Fifth Ave. in the Gaslamp Quarter. Fifth Avenue saw its average room rate decline from an average $500 when it opened less than three years ago to less than $200 as of the end of May.

Sunstone Hotel Investors (NYSE: SHO) of Aliso Viejo, Calif., stopped making payments on a $65 million loan secured by the 258-room W Hotel last year before the group simply handed the keys back on the property.

In July, Atlas Property Group identified some 40 hotels that were in default in San Diego County ranging from the 220-room screw-shaped Holiday Inn on First Avenue in downtown San Diego to the 182-room Ramada Plaza Inn in Mission Valley. But the luxury hotels that had the furthest to fall appear to have taken the biggest financial hit.

The Park Hyatt Aviara hasn't only been hit with declining revenues -- legal battles both over the branding (the resort had been a Four Seasons brand since its opening) and the management of the resort were also significant distractions to its owners, who had the property since December 2006. The owners eventually won out and went with Dolce Hotels & Resorts to manage and Park Hyatt to brand the hotel.

The 329-room Aviara resort, which had been delayed for years due to a bad economy in the early 1990s, was completed in 1997. It has an 18-hole golf course designed by Arnold Palmer, a 15,000-square-foot spa, 39,000 square feet of meeting space and 20 acres of undeveloped land.

As for whether Palo Alto-based Broadreach Capital Partners and Maritz Wolff of Los Angeles and St. Louis will try to renegotiate or walk away like Sunstone did, there was no clear answer Thursday.

"Discussions are still ongoing," Lewis Wolff, co-founder and chairman at Maritz Wolff, said in an e-mail Thursday. He declined to comment further.

Applying a 9 percent capitalization rate to the 12 months ended Dec. 31, 2009, the value of the property is about $34.4 million, RealPoint said. Realpoint said that compares with an appraised value of $251 million when the loan was issued in 2006.

-- Bloomberg News contributed to this report.

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