Little Tokyo landmark defaults on $33.6-million loan
The Kyoto Grand Hotel and Garden, one of Little Tokyo’s most luminous landmarks, is in default on a $33.6-million loan and could face foreclosure if a resolution is not reached by Monday.
But Martin Taylor, an Irvine attorney who represents the hotel’s owner, Little Tokyo Partners LP, said Tuesday that he was optimistic a deal could be worked out with First Citizens Bank and Trust, which recently took over the loan from the original lender.
“We’re confident that once we sit down with the new lender and educate them on this project, we’ll be able to work something out,” Taylor said.
A bank source who asked not to be identified also said the lenders did not believe the property would go into foreclosure and that a resolution would be reached.
The 21-story hotel and its adjoining shopping mall, Weller Court, were sold to 3D Investments, which purchased the property through Little Tokyo Partners from East West Development Corp. in 2007. The sale stunned the Little Tokyo community and raised concerns about whether the new non-Japanese owners would preserve the hotel’s Japanese ambiance and continue its longstanding support of such cultural events as Nisei Week and Japanese New Year.
The hotel has continued its Japanese themes with a name change from the New Otani to Kyoto Grand and renovation of the lobby and rooms. Support of community events has continued. But the hotel’s signature restaurant, Thousand Cranes, recently closed. Some community members complained that the food quality declined after a non-Japanese operator took it over and some Japanese restaurant staff left after being asked to take significant pay cuts, according to one of them.
Hotel General Manager Richard Gaines said several options are being explored for the restaurant space, including subletting to a new operator and using it as banquet space. He also said the recession hurt all hotels last year, including the Kyoto Grand, but that business has picked up considerably this year.
Taylor said the property is not for sale and that rumors that it has been sold are inaccurate. He said reports that Weller Court was also in default were untrue. Payments on the Weller Court’s $10.4-million loan were current, he said.
Chris Aihara of the Japanese American Cultural & Community Center said the community is watching with concern over the future of the landmark hotel.
“We hate to see something that’s been important to the community seem very fragile,” she said.