Foreclosure possible for Embassy Suites S. Lake Tahoe
By Kathryn Reed
Embassy Suites Lake Tahoe’s parent company is in financial trouble.
Ken Corporation of Japan, which has owned the hotel property since December 2000, is looking to refinance a loan in order to stay solvent. (Hilton continues to operate the hotel and the Echo restaurant.)
Max Saito, representative with Ken Corp., told Lake Tahoe News the $3 billion corporate bond the company is repaying involves multiple properties.
Embassy Suites is in financial trouble. Photo/LTN
“We are negotiating a term so we can have better terms for the loan. It’s not necessarily that we cannot pay,” Saito said.
However, the company first defaulted on its payment in February.
In April, the appraised value of Embassy Suites was $36.3 million. This is down from $79.3 million in 2006, when the loan went through. The loan represents more than 160 percent of the value of the property.
Although room nights are being generated this summer, this past winter hotels throughout Lake Tahoe were empty because snow was not falling. Plus, the entire Lake Tahoe Basin is still stuck in a recession, no matter what national pundits say. The current unemployment rate for the city of South Lake Tahoe hovers at 15 percent.
Saito kept reiterating the property is neither in foreclosure nor is it on the edge of it. But that is not what others are saying.
According to Trepp, a leading provider of information, analytics and technology to the commercial real estate and banking markets, “The servicer is dual tracking foreclosure as well as a possible modification.”
Saito said he believes a modification will be successfully negotiated.
Asked what the worse case scenario would be. Saito told LTN, “If we can’t renegotiate the loan, then it’s the normal course for a foreclosure. Someone else buys it; either the lender or different owner.”
Ironically, Ken Corp. bought the property in a bankruptcy deal.
KOAR-Tahoe Partners was unable to keep up with it payments to Mitsui Trust & Banking Co. The firm had a $53 million seven-year construction loan because it was trying to convert 188 of the rooms to time shares. KOAR went into default in summer 2000. That’s when Ken Corp. stepped in.
The hotel opened in December 1991. In December 2006, it underwent a $3 million renovation. It is the largest hotel in the city limits.
The Embassy is a fantastic property operated by a crew of professional individuals who make you glad you’re there. Everytime I’m there, the place is busy. I count this as a gem in our community. Keep us informed LTN.
Another nail in the coffin…
This is a first class facility. The precipitous decline in its appraised value is astonishing. Let’s hope its financial matters are worked out.
The G.M. there was the only s.l.t. business operator to speak in favor of the loop road. Maybe they need new management.
Another honest article, there might be hope for this town after all.
Look at the decline in assessed value along with the million-dollar loss in taxes from the Marriott. In late June LTD won the tax assessment appeal on the hole in the ground.
Yet the paper runs a story about how El Dorado County tax assessments declined less than one percent.
Embassy Suites is a huge supporter of this town and their donations to fundraisers and other events is amazing! No new management needed in my opinion.
Even in bankruptcy, should that be where this situation ends, there will be a new owner and we probably won’t see even a dimple in service changes.
Its a great property and very good for our town.
I’m sure Vail will be interested..ask people running for City Council
Me. of course they will kick the tires. Qustion is, are they selling them piecemeal or take all of the propoertires?