Foreclosure Ordered for May : Radisson Developer in 11th-Hour Scramble
Faced with seemingly insurmountable odds, developer Carroll Davis on Monday said he will mount one last-ditch effort to save his Radisson Hotel from foreclosure next month by federal regulators.
Davis said he is trying to raise the funds to satisfy debts totaling more than $30 million owed to the Federal Savings & Loan Insurance Corp. (FSLIC), which is scheduled to take control of the posh 13-story, 264-room Mission Valley hotel sometime in May.
Davis would not disclose the details of any deal to prevent foreclosure, nor would he identify from whom he would secure financing.
The FSLIC is owed more than $30 million in construction loans and back interest owed by the Radisson to San Marino Savings & Loan, which was seized by regulators in 1984.
FSLIC officials have said previously that hotel operations will continue unhampered by the foreclosure procedures.
“It would be short of a miracle” for Davis to be able to refinance the hotel, said one source close to the bankruptcy case. “He’s had two years to try and refinance.”
U.S. Bankruptcy Judge James Meyers last month ordered the foreclosure after he determined that the hotel could not afford to pay the monthly interest charges on the defaulted loans. The payments would have represented “adequate protection” on FSLIC’s claim as a secured creditor.
Davis faces a Thursday deadline to file an appeal to Meyers’ ruling, although Davis said on Monday that he probably will not appeal the judge’s ruling.
Observers speculated Monday that Davis may be able to buy the hotel for less than the $30 million owed to FSLIC.
Without bankruptcy trustee C. Hugh Friedman’s trying to sell the selling the facility for more than what is owed the FSLIC, said one source, “maybe Davis can buy it cheaper.”
In an interview last week, Davis said he was prepared to meet the FSLIC’s adequate-protection requirement--about $243,000 per month--and that he was in the process of lining up the $1.1 million in back interest that Meyers said must be paid up front.
Mario Renda, owner of First United Fund Ltd., a New York-based registered broker-dealer that earlier this year became a 45% partner in Davis’ San Diego Diversified Properties, was prepared to guarantee the $243,000 monthly payment, Davis said.
Previously, Renda had said he would only pay up to $140,000 per month to the FSLIC.
Even had he decided to appeal, Davis may have been foiled in his efforts because of past-due legal fees, sources close to the case said. Without those legal expenses being paid, Davis’ attorneys probably would not have filed the appeal, the sources said.
Davis’ attorneys, Colin Wied and Bill Smelko, would not comment on Davis’ legal fees.
Legal fees charged by all attorneys in the case have totaled more than $400,000, Davis said, adding that, despite his requests, his legal representatives have not protested some of those fees.
Wied also has been retained as special counsel to Radisson bankruptcy trustee Friedman to handle one aspect of the FSLIC litigation.
However, that dual representation of the debtor and the trustee has “never once” prevented Wied from acting as an advocate for Davis, according to Smelko.
Another $530,000 in fees, Davis said, has been awarded to the Palmieri Co., the Los Angeles-based firm under contract with the FSLIC to liquidate San Marino Savings & Loan.
About $980,000 has been spent “for me to lose the hotel,” Davis complained.
The Palmieri Co. is headed by well-known “business doctor” Victor Palmieri, whose past efforts include reorganization of the non-rail properties of Penn Central Transportation Co. and the takeover of Baldwin-United Corp. in mid-1983. (Palmieri also has a tie to the White House: His daughter, Doria, is married to President Reagan’s son, Ron.)
For Davis, a former Marine Corps sniper who built a multimillion-dollar real estate investment firm during the Southern California go-go market in the late 1970s, building the Radisson Hotel was an attempt to change his image following the bankruptcy of his Playboy Club franchise in San Diego in 1982.
“This was the comeback from the Playboy fiasco,” he conceded. “But through no fault of my own, I’ve become a victim . . . and then I was caught up in the legal good-ol’-boy system. I’m a down-home, true American, and I just can’t walk away from these injustices.”
The “system” Davis believes is weighing on him includes his lengthy, heated and expensive legal battle with the FSLIC, which has continually scoffed at Davis’ refinancing proposals.
In addition, Davis said, the FSLIC’s dealings with Hotel Inter-Continental developer Doug Manchester have been tame compared with its relationship with Davis.
Beverly Hills Federal Savings & Loan had a $30-million equity investment in the bay front hotel when federal regulators took it over a year ago. That investment was later whittled down to $10 million.
In another transaction, this one with state officials, the license that allowed the Radisson to sell liquor is in the process of being transferred to trustee Friedman--without Davis’ consent.
Davis said last week that the license is in the name of American Real Estate Associates and Bingo Palace, the two firms that comprise the partnership that owns San Diego Diversified Properties, the developers of the Radisson.
Transferring the license to trustee Friedman even though the bankrupt partnership is not listed as the licensee is “not a problem,” according to Alcohol Beverage Control Board District Administrator Pete Case.
Among the firms contacted by Davis in his 11th-hour scramble to secure financing is Fabulous Inns of America, the Mission Valley public company that for the past two years has been embroiled in a bitter management control fight.
