Sunstone Hotel Turns Over 2nd Property To Lenders

SAN CLEMENTE, Calif. (AP) — Sunstone Hotel Investors Inc. plans to turn over its Marriott Ontario Airport hotel in Southern California to its lenders, the second of its properties to be handed back to the bank after the company decided against making further mortgage payments.

On a conference call with investors Wednesday, Chief Financial Officer Ken Cruse said the company has ended talks on amending terms of the hotel's $26 million loan. He noted that Sunstone has marked down the value of the Marriott Ontario to just $16.7 million, making the company "underwater" on the mortgage.

"While we appreciate the special servicers' willingness to attempt to work toward a creative solution, ultimately we were unable to meet on common ground and accordingly we are now working to effect the appointment of a receiver which as with the W San Diego will result in our deconsolidation of these assets and the associated mortgage," Cruse said.

Sunstone in June said it would turn over the keys to a 258-room W Hotel in San Diego to its lenders, defaulting on its $65 million mortgage after failing to lower interest payments. Sunstone executives said at the time that they would consider turning over other hotels if they meet certain criteria, such as if their "intrinsic value" is permanently below the amount of the mortgage.