Radisson Hotel developer Carroll Davis could soon lose his Mission Valley property through foreclosure if he is unable to refinance a $24.5-million construction loan that has been in default since December and is due today.
Davis, through his San Diego Diversified Properties, secured the loan from troubled San Marino Savings & Loan. He is now negotiating the loan’s status with federal regulators, who closed San Marino in December after seizing control of the company in early 1984.
Although “there is a possibility that the negotiations will be successful,” Nick Sylvester, a spokesman for Davis, acknowledged that if negotiations for a settlement fail Davis “is out” as owner of the hotel.
Foreclosure proceedings typically start 90 days after loans are declared in default. However, Davis received a 30-day foreclosure extension from regulators, and that deadline expires today.
If no settlement is reached, the government would search for a buyer for the 13-story, 264-room Radisson.
Under that worst-case scenario, there would be no discernible change in the hotel’s operations and the facility’s 240 employees would remain in place, said Sylvester.
In addition, Minneapolis-based Radisson, which issued the franchise to Davis, would still offer the hotel its marketing services and reservations network, according to Radisson spokesman Mark Weber.
It remains uncertain, however, who would actually manage the hotel. Davis is the owner and operator of the property.
Officials at the Federal Savings & Loan Insurance Corp. would not discuss the case Monday, other than to confirm the negotiations.
If Davis can reach a short-term settlement with federal regulators, then there are unidentified financial partners “waiting in the wings” to both complete the loan payments and fund Davis’ oft-delayed plans to build a second Radisson Hotel tower and a nine-story parking garage next door, Sylvester said.
Since it opened in June, the Radisson has been beset with financial controversy. San Diego-based Great Pacific Hotels resigned its management contract with Radisson in August after it refused to honor Davis’ alleged requests to withdraw $94,000 from the hotel’s operating account.
Davis has repeatedly denied he ever made those requests.
In addition, investor Wayne Reeder, whose Bingo Palace Inc. owned 50% of San Diego Diversified, earlier this year severed his ties with Davis, capping months of negotiations and efforts by Reeder to be bought out of the project.
Despite its financing problems, the Radisson property has been performing relatively well and has placed increased emphasis in the past several months on community involvement. Occupancy during the first four months of 1985 has averaged 70% to 75%, which is considered respectable in light of the county average of 79.9% between January and March.
In addition, Davis has consistently been publicly optimistic about his financial problems. Earlier this month, for example, the hotel made a routine announcement that it had signed a long-term contract with Cox Cable San Diego for cable and pay television services. Davis said at the time that the agreement included the “second phase of the hotel’s expansion.”
Davis, a former Marine Corps sniper who parlayed his $500 life savings 13 years ago into a multimillion-dollar real estate and property management business, is no stranger to controversy.
Davis’ Leisure Systems was the franchise holder of the Playboy Club of San Diego. The club closed in 1982 and Davis’ firm, which fell victim to the real estate market’s downturn in the early 1980s, later filed for Chapter 7 bankruptcy liquidation.