Lenders to the Las Vegas Hilton filed a foreclosure notice against the property Sept. 2 – but that doesn’t mean they’ll actually foreclose anytime soon.
The 2,950-room hotel-casino, which has regularly lost money during the recession, disclosed Aug. 10 it was in default on its $252 million term loan after skipping three monthly loan payments this summer totaling $3.5 million in order to conserve cash for operating purposes.
Default, foreclosure and election to sell notices for major properties have been common in Las Vegas during the economic downturn and are typically followed by months of negotiations that may or may not result in a foreclosure auction. A complication in foreclosing on casinos is that the foreclosing party needs to line up a licensed gaming operator to maintain gambling operations.
A foreclosure notice, for instance, has been pending since November 2010 against the owner of the 826-room Westin Casuarina in Las Vegas – and Fitch Ratings reported Sept. 2 that the special servicer of that loan is still proceeding with foreclosure plans.
The Wall Street Journal, which first reported the foreclosure filing against the Hilton, noted investment banking giant Goldman Sachs is both a lender to and investor in the Hilton.
That indicates any foreclosure or preplanned bankruptcy could be on friendly terms -- unless there are disputes with the other main investor, Colony Capital LLC.
It’s also possible the default will be resolved without a foreclosure or bankruptcy – just as a 2010 default by the Hilton was quietly resolved.
Owen Blicksilver, a spokesman for Colony Capital, which supervises Hilton operations, said the company had no comment on the situation Wednesday.