A couple of interesting things about this story — first, that Starwood was smart enough to unload that hotel in June 2006, right at the top of the bubble. Second, that the REIT in default has enough cash to keep paying the mortgage, they’re just choosing not to.
San Clemente, Calif.-based Sunstone said its loan special servicer has declined the company’s attempts at renegotiating interest payments lower. Since Sunstone feels the W San Diego is now worth much less than what it owes, the company would rather turn it over to the bank than have hefty interest payments continue to drain cash from its balance sheet.
“While the company maintains more than adequate liquidity to support or repay this mortgage, we believe a conveyance of this hotel in settlement of the debt would be in the best interest of our stockholders,” Chief Financial Officer Ken Cruse, said in a statement.
Why should we expect individual homeowners to do anything different when they’re underwater on their loans?
