Lenders are taking ownership of the Westin Casuarina Las Vegas Hotel, Casino & Spa after its owner chose not to fight foreclosure proceedings, its general manager said Wednesday.
The Flamingo Road property, which is east of the Las Vegas Strip on Koval Lane, was hit with foreclosure papers in November 2010 after owner Columbia Sussex Corp., of Crestview Hills, Ky., defaulted on the property’s $160 million mortgage dating to the economic boom in 2005.
On Tuesday, the special servicer appointed by the lenders, CWCapital Asset Management LLC, filed suit in Clark County District Court against the Columbia Sussex subsidiary that owns the property and asked the court to appoint a receiver to run it at least until the foreclosure is completed and it’s sold.
Sig Ortloff, general manager of the Westin Casuarina, said the parent company isn’t fighting the foreclosure and the change in management will be good for the 826-room hotel and its 400 employees.
The property has been in limbo for some time and in need of capital improvements, which may happen with new ownership, he said.
With the hotel being overleveraged after the recession slashed property values in Las Vegas, Columbia Sussex likely decided it didn’t make sense to continue paying the mortgage, Ortloff said.
The mortgage payments were $904,000 per month, court records show.
"We’re looking forward to the new management," Ortloff said, adding a key asset for the property — its Westin brand — will continue there.
The casino portion of the property has been leased to a third party that is not involved in the foreclosure, he said.
Lenders filing Tuesday’s suit along with CWCapital were U.S. Bank as trustee for the registered holders of Wachovia Bank Commercial Mortgage Trust securities. After the mortgage loan was issued in 2005, it was divided into certificates and sold on Wall Street as securities by Wachovia Bank, which was later acquired by Wells Fargo Bank.
The suit said Columbia Sussex’s subsidiary defaulted on the mortgage by failing to make a payment in April 2010 and that a receiver was needed because "the property faces a threat of mismanagement and impairment because defendant is in financial peril."
"Defendant has no equity in the property and consequently little motivation to manage it properly," the lawsuit said.
The proposed receiver is Pyramid Hotel Group of Boston, which already manages about 70 properties around North America, including Loews Lake Las Vegas and the Westin Casuarina Resort & Spa in Grand Cayman, Cayman Islands.