June 27, 2011
Puttin’ The Ritz-Carlton Lake Tahoe On The Courthouse Steps
As owners of the Ritz-Carlton Residences in San Francisco continue to struggle, the Ritz-Carlton Highlands Lake Tahoe near Northstar-at-Tahoe is scheduled to hit the courthouse steps in Roseville this afternoon with $164,717,243 in principal, interest and fees due on two loans totaling $157,000,000.
From the managing partner of the development in back in April 2010:
"We're working closely with the bank to address some financing-related matters, and once those are resolved, the outstanding balance will be paid," Riva said. "We hope to resolve this in the next 60 days."
It's now 437 days later and Bank of America has grown tired of banking on hopes.
∙ A Violation Of Trust [SocketSite]
∙ The Ritz-Carlton, Lake Tahoe [ritzcarlton.com]
∙ Bank of America files notice of default on Ritz-Carlton Highlands Lake Tahoe [sierrasun]
First Published: June 27, 2011 8:45 AM
Comments from "Plugged In" Readers
Charge all traveling Wall St. crooks $5,000,000 a night, problem solved!
Posted by: sf at June 27, 2011 9:19 AM
All of the enviro restrictions in Tahoe make this kind of luxury hotel impossible to built. It had so few rooms that it really made no sense whatsoever. Don't expect to see another ever again.
Posted by: Marc at June 27, 2011 10:54 AM
By "this kind of luxury hotel", you mean the kind with people standing around to take your skis off for you when you ski in from the run. The kind with a staff to guest ratio so high that they would basically need a direct pipeline from their guests' asset managers to the hotel to break even.
"This kind of luxury" is failing all over the place, not just in Tahoe. Blaming the environmental regulations seems a bit like blaming SF's discretionary design review for the failure of the RC Residences in SF.
Posted by: embarcadero at June 27, 2011 12:07 PM
It's not just "near" Northstar -- it's on the ski slopes, ski-on/ski-off.
As embarcadero said, the regulations in Tahoe have nothing to do with why this failed. Prices are up on all services all over Tahoe because of increased financing costs, stupid building projects like this that made no sense, and the general downturn resulting in fewer people skiing (it's a luxury sport, after all). The Ritz at mid-mountain may have had few rooms, but the market for this sort of hotel is also similarly small.
Posted by: sfrenegade at June 27, 2011 12:17 PM
The environment restrictions for the Lake Tahoe watershed are indeed quite strict. This being downstream of Tahoe, I assume the restrictions are much more lax.
Posted by: joh at June 27, 2011 12:59 PM
"This being downstream of Tahoe, I assume the restrictions are much more lax."
That's true also. If you drain towards the lake, then you face much higher restrictions than if you drain towards desert Nevada. It might still have to go through TRPA, but the environmental review is far less strict.
Posted by: sfrenegade at June 27, 2011 2:11 PM
Rare internet humor. The page at the Ritz-Carlton Highlands link is Default.htm.
Posted by: BobN at June 27, 2011 3:33 PM
Sale postponed. The word on the street says they have a buyer.
Also Northstar and Truckee are outside TRPA!!!
7/11/2011 9:30:00 AM
Address: 13031 Ritz-Carlton Highlands Court
Sale Status: Postponed to 07/11/2011
TS Number: 252340
ASAP Number: 4007732
Notice of Sale Amt: $164,717,243.48
Opening Bid Amt: 0
Sold Amt: 0
Sale Location: At the north entrance to the Bill Santucci Justice Center located at 10820 Justice Center Drive, Roseville, CA 95678
Trustee: Chicago Title-San Bernardino
Trustee Phone#: (909)884-0448
Posted by: inclinejj at June 27, 2011 4:40 PM
Weak Sales and Marketing divisions. These guys/gals are not very innovative..
Posted by: Mike at June 27, 2011 6:11 PM
Not actually being at Tahoe, it's a one-season resort. It was never going to work for so many reasons.
Posted by: Scooter at June 27, 2011 7:49 PM
It's actually a great resort.
Posted by: eddy at June 27, 2011 8:04 PM
Silly, over the top place...it never had a chance.
Leave this crap in LA
Posted by: gh at June 27, 2011 8:15 PM
"Leave this crap in LA"
He/she says as he/she walks by the Ritz-Carlton and the St. Regis in San Francisco...
Posted by: sfrenegade at June 28, 2011 10:09 AM
Well it was just like a game of Monopoly. You had the bankers giving out funny money and the other players came out with their hands out!
Northstar was one of the last cool resorts were they limited the amount of skiers/snowboarders per day. You could ski in jeans and no one would give you the "stink eye"
East-West came in and tried to make a 5 star resort overnight..
Too much too big too fast too soon.
Posted by: inclinejj at June 28, 2011 10:23 AM
Tahoe still has a few other quiet(er)small town resorts that aren't '5-star', and that's what makes the mountains so great. Yes, it is a NIMBY thing for many of us. Same fate befell West Shore Cafe in Homewood...they had 1-2 summers of charging $12 for a beer and $27 for lunch, and then were forced to fire sale the property. Would be shame to see the developers further screw up Tahoe with their formula mixed-use developments. Most of these high end resorts have more wait staff than customers for about 10 months per year, so hopefully the economics will kill these off in the future. Not to mention the traffic concerns...
Posted by: anon at June 28, 2011 11:26 AM
"Not actually being at Tahoe, it's a one-season resort."
You may want to check back in the winter, I hear that they've now added winter skiing to their summer golf offering.
... ah, kidding aside good old FlatStar is the mountain of choice in stormy white-out conditions that close down the top of the higher resorts. So long as the back side lifts are running you can find good visibility in the trees. Plus a white-out storm is very effective crowd repellant so you won't face the legendary lines or need to park in the next county.
My predictions for this property is that the same or similar cast of characters who initially developed this scoop it up from the courthouse. The business should work at some base cost because FlatStar tends to attract luxury seekers and the lack of serious ski terrain won't deter those guests.
Posted by: The Milkshake of Despair at June 28, 2011 12:12 PM
From what I can tell, some of these were offered as fractionals. For comparison, here's what happened at the Marriott Grand Residences in South Lake Tahoe. As I wrote in Jan. 2008: the current lowest resale price I found for a 1bed/1bath quarter share [is] $110,000 compared to the developer price of ~$220k. It looks like prices have fallen further as a quarter share (13 weeks) 1bed/1bath now goes for ~$52k on the secondary market. The yearly maintenance fee is ~$7000.
Posted by: EBGuy at June 28, 2011 2:13 PM
Hmmm... You can rent a nice 2-3br house in South Lake for less than $2000/mo. I'm not sure if that would be comparable to what the Marriott Grand Residences offers but it is cheaper than the quarter share maintenance fee and requires no investment whether it be $220k or $52k.
Posted by: The Milkshake of Despair at June 28, 2011 2:42 PM
"The yearly maintenance fee is ~$7000."
That number makes no sense. The Marriott there is only really useful if you're skiing at Heavenly. If you consider any realistic number of ski-trips from the Bay Area, for example, you could easily spend less than the maintenance fee alone on hotels.
For $250/night, you could probably stay in a 2-room suite at the Embassy Suites at Stateline and walk your skis only slightly further over to the Gondola at Heavenly Village. That's 28 nights if you're spending $7K annually! -- equivalent to every weekend from Christmas to March 20 or so, plus 2 extra days between Christmas and New Years. Why would you pay additional funds for the timeshare itself?
If you go to Tahoe in the summer, there's no real benefit to being at the Marriott. That means 3/4 of any share you buy is either worthless or overpriced. Bad economic model.
Most time shares are for people who can't do math and aren't imaginative enough with their vacations.
Posted by: sfrenegade at June 28, 2011 3:11 PM
In all seriousness, aren't most time shares for people who don't really ever stay at their original location? The benefit of Marriott, from my understanding, is that they have nice properties all over the place that you can trade your weeks for.
Posted by: Scooter at June 28, 2011 7:32 PM
You can trade but sometimes you don't get equivalent properties. If trading down don't expect a refund for the difference. If you trade up then there will be an extra fee. Figure that market inefficiency into the long term cost.
And speaking of market inefficiencies, be sure to check on the difference between retail and resale market prices. Oh never mind: of course who would ever want to sell such a fantastic property. You'll want your children to inherit ... the maintenance fee.
Posted by: The Milkshake of Despair at June 28, 2011 8:09 PM
But when you live in town. You ski mid week from Tuesday till Thursday.
you know you are a Tahoe local when you shop on Thursday and avoid the markets etc friom Friday till Monday
I am on the North Shoe LT the name gives it away and I ski/board Alpine and Mt Rose
I hit Sugar Bowl a couple times a season on my way out of town.
I have checked out the Ritz-Carlton a few times. Actually a couple of my buddies did some of the work on the resort. Nice place but..like I said above..too much, too big too fast too 5* right at first..
Town folk also said the Hyatt IV would fail and go into bankruptcy and foreclose..
Posted by: inclinejj at June 28, 2011 9:04 PM
Is it bad that I'm just now getting the "Puttin' On the Ritz" Headline? Good one.
Posted by: eddy at June 29, 2011 9:51 AM
I cannot fathom why anyone would ever buy a fractional vacation rental property. The annual maintenance fee alone makes it uneconomical. Then there is the fact that you are tethered to one property, or a group of properties, and to make it worse, there's a capital cost as well. Its just an awful financial decision.
To put it in perspective: I just (last night) paid the highest nightly hotel rate I've ever paid anywhere in the world (400 Euros for a Jr. Suite at a 5* hotel in Rome). For $7k I could live here, in luxury, in the center of one of the greatest (and most expensive) cities on earth, for about two straight weeks for the price of the Marriott's annual maintenance fee. That's how ridiculous their fees are!!
Posted by: Jimmy (No Longer Bitter) at June 29, 2011 10:01 AM
off topic, but does anybody know anything about the big luxury resort that went in in Half Moon Bay? I see it in the distance when I occasionally drive to Pescadero, and wonder why would anyone want to go there?
Posted by: bernalkid at June 29, 2011 10:54 AM
The annual maintenance fee alone makes it uneconomical.
Bear in mind that Grand Residence studios rent directly from Marriott for $200 or more per night. The one bed/one bath I posted has a weekly cost (maintenance fee) of ~$540. So there's an arbitrage opportunity here, but I imagine it's a bit like pushing the proverbial boulder up a large hill. You slack off for a moment and get crushed by the boulder (maintenance fees). That's a lot of money to bleed and most likely its the desperate owners in financial difficulties that are driving the resale prices down.
Posted by: EBGuy at June 29, 2011 11:47 AM
Off topic as well, but a while back I was looking at a list of SF RE sales and a number of them were for fractional shares. Not that I know much about fractionals, but I don't recall ever seeing any on the MLS.
The thought that just hit me was if this could be the cause of the discrepancy we sometimes see here between MLS sales counts and other sources.
A single unit could count for a a great deal of "sales" if each share was counted separately.
Posted by: tc_sf at June 29, 2011 11:49 AM
"Bear in mind that Grand Residence studios rent directly from Marriott for $200 or more per night."
Sure, but I get a rate right now at the Embassy Suites next door for $200/night for a 2-room suite on MLK weekend (busy weekend in SLT). You pay extra for being able to walk to the lifts or for ski-on/ski-off. The question is whether you're paying the right price.
If you hustle, you may be able to make up the difference, but $540/week is a strong headwind. I didn't realize the maintenance fee you were quoting was for a quarter share -- I thought that was for a full share. That changes my math considerably! The studio is also apparently officially for two people per one the postings on that site you sent.
Posted by: sfrenegade at June 29, 2011 2:50 PM
Word on the street is the owners are trying to modify the loan on the Half Moon Bay Ritz-Carlton also.
Posted by: HMB Ritz at June 29, 2011 3:53 PM
"I didn't realize the maintenance fee you were quoting was for a quarter share -- I thought that was for a full share."
Well EBGuy stated "The yearly maintenance fee is ~$7000" which could be interpreted either way. 7000/4 == $1750 which is about $135/week and that seems too low. So I'm guessing that a quarter share owner pays $7000 per year. That's $540/week and in-line with other timeshares and even on the low side. Still timeshare fees are high considering how it compares with unrestricted hotel reservations.
A timeshare maintenance fee should be somewhat in-line with an equivalent condo HOA fee plus some extra for maid service, extra resort amenities not available in a condo, and management overhead.
Posted by: The Milkshake of Despair at June 29, 2011 4:24 PM
"Ritz" apparently was a misnomer in this case?
Posted by: bernalkid at June 29, 2011 6:09 PM
I live at Lake Tahoe and those of us who are residents here generally are offended that the folks at Northstar use the slogan "Northstar at Tahoe", because the resort is actually located outside the Lake Tahoe basin. The development restrictions that apply inside the Tahoe basin did not apply to this development and they do not apply to any development outside the basin.
The Ritz-Carlton development is a failure because Northstar is not a destination resort and it never will be. It's not Jackson Hole or Vail, it does not have the terrain or any other features to attract large numbers of repeat visitors.
Posted by: Don Kanare at July 30, 2011 8:18 AM
Posted by: [anon.ed] at July 30, 2011 8:37 AM