Newporter Is a No-Sale : 5 Bids for Hyatt Resort All Too Low, RTC Says

The landmark Hyatt Newporter Hotel, on the market for more than four years, has again failed to find a buyer.

At least five bidders made offers in early October for the 410-room resort, but the federal Resolution Trust Corp., which took over the Newporter in January, 1991, and had invited bids, turned them all down, saying that the amounts were just too low.

“They were not acceptable,” said Mike Fulwider, spokesman for the federal agency that acts as conservator for failed savings and loans. “We’ve going to continue to market this building.”

One of the bids was reportedly only $5 million--about one-fourth of the hotel’s appraised value four years ago.

The RTC took over the Hyatt Newporter after its owner, Beverly Hills-based Columbia Savings & Loan, was seized in 1991. That made the federal agency the hotel’s sixth owner since it opened 33 years ago.

The first big resort hotel built in Newport Beach, the Newporter is actually a series of four sprawling buildings and four California-style villas surrounded by a nine-hole golf course. Columbia Savings bought the hotel for $26 million in 1985 from Ridgeway Ltd. of Newport Beach and spent millions of dollars renovating it. The Hyatt Corp. took over management of the property in 1989.

The RTC has encountered several obstacles while trying to find a buyer for the property, the main one being the terms of its lease. The land on which the hotel sits is owned by Rosenberg Real Estate Equity Funds in San Francisco, which bought the 26-acre site from the Irvine Co. in June, 1992. Rosenberg leases the hotel itself to the RTC under an agreement that is to run through 2048.

Real estate industry insiders said the Newporter’s potential buyers are concerned that rates or other terms of that long lease might change.

Also, the hotel has failed to keep pace in the rapidly changing hotel industry, real estate experts say. Over the years, newer hotels have lured away its clientele.

“The problem with the Newporter is that the world has changed around it,” said Donald W. Wise, a vice president with the hotel division at CB Commercial Real Estate Group in Newport Beach. “The business traveler is going to stay in the John Wayne Airport area, and the tourist is going to stay along the coast in newer hotels.”

Wise estimated that the hotel, valued at about $20 million in 1990, is now worth $10 million to $12 million. Possible buyers, he said, could include a hotel company or a Wall Street-based investment fund.

Barry Lewin, manager of the Newporter, said Monday that the hotel has been doing well.

“We’ve had close to 66% occupancy,” he said, and “there’s been a lot of interest from buyers. The RTC is just trying to find the right buyer at the right price.”

The Orange County hotel business in general has posted gains recently, especially in the airport area, where the occupancy rate this year through August was up 7.2% from the same period of 1993. Countywide, the occupancy rate through August was 68%, according to PKF Consulting in Los Angeles.

“But this improvement doesn’t help the Newporter like it helps the first-class hotels in the John Wayne Airport market,” Wise said. “Those hotels service the business travelers.”

However, Randy Karns, a partner with national accounting firm Arthur Andersen and a specialist in hotels, said the entire Orange County hotel market should continue to improve, boosting the Newporter’s chances of finding a buyer.

“We’ve seen some recent improvement in hotel rates and occupancies, mostly because so few hotels are being built these days,” said Karns, who is based in Irvine. “This improvement will help the Newporter.”