"This was an opportunity to buy at an extremely ripe price since there was no minimum," Rod Apodaca, national director of Accelerated Marketing Group's hospitality division in Irvine, CA, tells GlobeSt.com. "We've had a large number of hotel users and other endusers looking at it."
Palo Verde Property LLC of Los Angeles beat 20 other offers for the 5251 S. Julian Drive property. The rules required bidders show up with $100,000 cashier checks for the initial down payment and ante up the earnest money to 10% by this week. The closing deadline is May 28 although several backup contracts have been signed with other bidders, Apodaca says.
The 5.4-acre property, just off Interstate 10, consists of a two-building, 20-year-old hotel with an 8,000-sf freestanding restaurant on an adjacent 1.2 acres. The hotel has remained open on a limited basis and the restaurant was closed.
"It has potential, with a free-standing restaurant and very nice visibility from the street," says Lee Chen, a minority partner with Palo Verde Property. Chen adds the partnership has identified the extended stay market as a potential use for the hotel. A potential brand could be signed as soon as 90 days from now, he says.
According to Apodaca, the seller had two to four days to accept or reject a bid based on the following three criteria: price, the bidder's ability to close and whether the bidder can conform to the contract. The winning bidder's cashier's check was turned over to the seller when the contract was signed. The earnest money was non-refundable unless the seller rejected the contract.
The property's original debtor, Taipai, Taiwan-based First Commercial Bank, is considering providing financing to the winning bidder. Palo Verde Property is working with the bank's Los Angeles branch.
The previous owner, Starbound Tucson Hotel LLC of Torrance, CA, had experienced "internal strife" within the partnership in recent months, leading to Chapter 11 reorganization, says Apodaca. Instead of foreclosing, First Commercial Bank agreed to an auction for an outstanding $3.9 million plus accrued interest, penalties and legal fees.
Apodaca and AMG, alongside joint venture partner Tucson Realty & Trust, were hired by the trustee assigned by the court to conduct the auction. Marketing took six weeks plus another 15 days were penciled for the closing period following the auction.
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