In a move that may stave off foreclosure for the La Costa Resort and Spa, a private equity fund has purchased $380 million in debt on the property at a steep discount from the lender.
KSL Capital Partners, which invests in leisure properties, has acquired the loan for a sum in the low $100 million range. A report in Commercial Real Estate Direct said the purchase price was estimated to be $120 million.
The willingness of the lender, Citigroup, to accept the discounted price reflects the dramatic plunge in hotel values over the last two years, estimated to be between 50 percent and 80 percent for California hotels, Reay said.
Hardest hit in the lodging industry has been the resort hotels. Just last year, the St. Regis Monarch Beach in Dana Point fell into foreclosure.
