Registry Hotel Is Looking for Investors to Bail It Out of Bankruptcy Proceedings
The partnership that owns the Registry Hotel in Irvine is seeking additional investors to boost the 293-room hotel out of bankruptcy proceedings.
The Registry partnership said it was the victim of too many hotels and too much competition in the John Wayne Airport area. The Registry was also hurt by a renovation program that closed parts of the hotel temporarily and forced it to turn away guests.
The partnership filed for protection from creditors under federal bankruptcy laws Nov. 13, saying it owed nearly $30 million.
“Now we’re talking to a number of potential investors for a joint venture,” said Jerry R. Thoele, a partner in the hotel. “The hotel will not be sold, and you can underline not .”
More than $21 million of the hotel’s debt is owed Homestead Savings & Loan Assn., a Bay Area thrift that loaned the Registry $26.5 million in 1984 to renovate the hotel and buy the land on which it stands.
Stumbling on hard times, the hotel had been negotiating with Homestead for about a year to ease the terms of the loan, said James Feder, a Los Angeles lawyer for the partnership. But the partnership stopped making loan payments in July, according to Homestead.
In October, the thrift asked an Orange County Superior Court judge to order a sale of the hotel. Proceeds would be used to repay the loan. To forestall such a sale, the Registry filed for bankruptcy about a month later.
Meanwhile the hotel--across MacArthur Boulevard from the airport--is operating normally while it works out a plan to repay Homestead and other creditors.
The Registry, the first major hotel in the airport area when it opened in 1976, is said to have operated profitably until its competitors began opening in big numbers after 1982. There are now 20 other hotels in the area.
Competition among hotels around the airport is fierce. The accounting firm Laventhol & Horwath estimated that just 65% of hotel rooms in the airport area have been occupied this year.
The Registry was also hurt in 1984-85 by the renovation work, said Feder, the partnership’s lawyer. The renovation was finished last year, but only in the last six months has the hotel regained some of the corporate clients that once used it to quarter their executives, Feder said.
$10 Million for Land
Also part of the mounting Homestead debt was money used to rebuy the land underneath the hotel, Feder said. The land had been sold to a pension fund and leased back to the hotel. But the partnership thought it would be cheaper to own the land again and spent $10 million reacquiring it, Feder said.
The Irvine hotel is managed by the seven-hotel Registry Hotel Corp. in Dallas under a contract, but it is owned by a partnership headed by Thoele, who is executive vice president of the hotel chain, and Charles W. Lanphere, who is president. The chain also manages another eight hotels under other names.
Despite the bankruptcy, the Registry might still be attractive to some potential investors, hotel consultants said. Its location near the expanding airport makes it attractive, as do the projections of continued strong demand for hotel rooms in Orange County.
“It’s a tough market out there,” said Rick Schwartz of hotel consultant Pannell Kerr Forster, a hotel consulting firm that has a contract with the Registry. “But there’s a tremendous amount of upside potential.”