Four hotels owned by Beanie Baby tycoon and Montecito resident, Ty Warner have a $425 million loan due in January, 2010. S&P just put the bond that the loan backs on “credit watch.” The loans are on the Four Seasons in New York, the Four Seasons Biltmore Resort and the San Ysidro Ranch, a 38-room resort, in Montecito, California, and the AAA Five Diamond-rated Las Ventanas al Paraiso in Los Cabos, Mexico. Warner may be the next casualty of the commercial real estate collapse.
Oct. 26 (Bloomberg) — Commercial real estate debt backed by four luxury hotels including the Four Seasons in New York may be downgraded by Standard & Poor’s because of a drop in cash flow from the properties.
S&P placed 15 classes of bonds backed by a $425 million loan to TY Warner Hotels & Resorts on “credit watch with negative implications” after net cash flow from the properties fell 46 percent below S&P’s expectations, the bond rating company said in an Oct. 21 note.
The loan is scheduled to mature in January 2010 and has one 12-month extension option remaining. “The loan is currently failing a debt-service-coverage hurdle that it must clear in order to qualify for an extension,” Standard & Poor’s said.
Luxury hotel owners risk defaulting on their debt as the recession cuts occupancies and the credit crunch constrains refinancing. Loans secured by more than 1,500 hotels with a total outstanding balance of $24.5 billion may be in danger of default, according to Realpoint LLC, a credit rating company that tracks commercial mortgage-backed securities. The loan backed by the Four Seasons in Manhattan and three other properties was sent to a special servicer on Oct. 16, 2009, according to Standard & Poor’s.
Donna Snopek, chief financial officer of Ty Warner Hotels, didn’t respond to telephone messages or an e-mail seeking comment. Net cash flow for the properties S&P placed on watch was $29.4 million in the 12 months through this past June, Standard & Poor’s said in its note. Occupancy at the hotels dropped to 58 percent from 69 percent for the year ended Dec. 31, 2008, S&P said.
In addition to the Four Seasons in New York, the three other hotels backing the loan are the Four Seasons Biltmore Resort in Montecito, California; the AAA Five Diamond-rated Las Ventanas al Paraiso in Los Cabos, Mexico; and the San Ysidro Ranch, a 38-room resort in Montecito, California.