It’s not a good time to open a new luxury hotel, but the 582 room Terranea in Rancho Palos Verdes, just outside Los Angeles, lasted all of 2 months before the ground caved in – the Terranea has gone into default with one of it’s lenders, and missed a chance to get a very essential tax rebate agreement from the City.
The oceanfront luxury hotel and accompanying resort facilities – built on the former site of Marineland of the Pacific - opened it’s doors on June 12, 2009, built over a 10 year period by the Lowe Hospitality Group with a massive price tag of $480 million.
Terranea’s primary lender is Chicago based Corus Bankshares, a bank which is itself in serious danger of being taken into recievership by the FDIC. Corus has invested $180m in Terranea, but is now unable to offer any more financial support to the Terranea.
This financial muddle led to Terranea missing a deadline for enrolling into a tax rebate agreement with the City of Rancho Palos Verdes, for which it needed $12.5m. The agreement was apparently a very critical element of Terranea’s ability to remain financially viable, and it’s entire future is now at stake.
With $322 million in loans, struggling to keep it’s doors open due to lack of funds and support from it’s primary lender, the Terranea could quite possibly go into foreclosure, or be taken over by another entity.
The management says they’re talking to their remaining lenders – which includes Cascade Investment Co. which is controlled by Microsoft founder Bill Gates. Cascade has filed a notice of default because Terranea has not been meeting it’s payments.
Photo courtesy Destination Hotels & Resorts.