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Sunstone Snares South Beach's Royal Palm Hotel
Art Buser, president and chief executive of Sunstone Hotel Investors Inc., has said in recent months that the real estate investment trust will shift to offense after punting several underwater hotels back to lenders in the past year.
On Monday, Sunstone scored its initial points in that offensive push.
Sunstone, based in Aliso Viejo, Calif., disclosed that it prevailed at a foreclosure auction to buy the iconic but troubled Royal Palm Resort Hotel on Miamis ritzy Collins Avenue for net consideration of $117 million. The price amounts to $286,000 for each of the Royal Palms 409 rooms.
Sunstone, which owns 30 U.S. hotels, positioned itself to make a run at the Royal Palm by buying an undisclosed portion of a junior tranche of the hotels $112 million in mortgage debt. Thus, even though Sunstone prevailed at the auction with a bid of $126.1 million, the REIT only will pay $117 million after factoring in the Royal Palm debt it already held and will forgive.
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