Refinancing Settlement Expected : Radisson Foreclosure Proceedings Delayed
Federal regulators late Monday delayed foreclosure proceedings against developer Carroll Davis’ Radisson Hotel, less than 24 hours before the 13-story, 264-room hotel was scheduled to be sold at foreclosure.
The foreclosure sale has been reset for Aug. 13.
However, both Davis and regulators said Monday that they expect to reach a settlement by that time on refinancing $27.5 million in defaulted hotel construction loans due to the Federal Savings & Loan Insurance Corp. (FSLIC). The loans originated with San Marino Savings & Loan, which was seized in December by federal bank regulators, who now control the loans. Had a foreclosure extension not been granted, Davis likely would have filed for Chapter 11 reorganization bankruptcy to prevent the sale of his Mission Valley hotel.
“It’s a tremendous relief,” Davis said. “We didn’t want to take any (bankruptcy) action. We wanted to maintain the integrity of the hotel . . . in the San Diego community.”
Davis said that his refinancing plan “looks promising,” while a regulatory source close to the negotiations acknowledged that Davis is “getting close” to hammering out a settlement.
Federal regulators replaced Davis as the Radisson’s operator one month ago, naming as receiver Royal Continental Cos. of California.
Since then, Davis said, he has spent “six days per week and 14 hours per day” approaching 200 lenders for funding.
“They discounted and underestimated fighting a country boy,” Davis said in an interview last week.
Jack Rubin, vice president of Palmieri Co., which is FSLIC’s agent in the San Marino liquidation, would not comment on his firm’s negotiations with Davis.
Davis’ latest proposal to federal regulators calls for the FSLIC to be paid $15.6 million and carry back $13 million in the form of a letter of credit. The note is to be fully paid in two years.
Financing has been secured through Siscorp, an Oklahoma-based investment-service firm that originates real estate loans for banks, credit unions and a group of 29 savings and loans in Oklahoma. Siscorp will hold the first trust deed on the hotel and a second tower and a parking garage that are to be built.
American Savings & Loan, the nation’s largest S&L; and a subsidiary of troubled Financial Corp. of America, will post the letter of credit and receive a second trust deed on the property.
(Financial Corp. has had extensive dealings with federal regulators. Last summer, it gave the Federal Home Loan Bank Board, parent agency of FSLIC, the power to hire and fire all directors and senior executives, as well as veto power over all decisions. In return, regulators loaned Financial Corp. millions of dollars to partly cover a $7-billion “run on the bank” last year.)
In addition, a group of Oklahoma business people calling themselves Oklahoma Diversified Properties will be a partner with Davis’ San Diego Diversified Properties.
The refinancing and the funding of the new projects will cost $56 million, according to Davis. About half of that will be paid to the FSLIC, and $13.5 million will be used to construct the second tower and parking garage.
The letter of credit will cost $750,000 to $1 million in fees, he added.
