Terranea Resort Construction Lender Files Notice of Default

Terranea Resort’s Construction Lender, Corus Bank, joined it’s mezzanine lender in filing a notice of default, which is the first step in foreclosure proceedings. Corus Bank is just a few days away from being sold or taken over itself due to the majority of their loan portgolio being in trouble. They still have not funded the last $13 million construction draw due on the property.

Lowe Enterprises, the developer of the resort, is frantically negotiating to restructure its credit arrangements. The Resort’s financial problems are being made worse by the fact that it has been unable to close most of the sales of the Casitas and Villa units due to a lack of financing available for the purchase of these type of limited occupancy units ( approval by the California Copastal Commission provided that occupancy by the owners are limited to either 60 or 90 days a year and must be made available for rent for the rest of the time ).

Some vocal apponents of the Resort are speculating that the resort will be forced to close, however in these situations where financial problems may lead to a change in ownership, resorts almost always stay open as it is in the best interests of the lenders to keep the property operational. Upon an ownership change, there may very well be a change in operator of the Resort.

There can be no denying that the Resort is a beautiful project and which will be a valuable resource for the Palos Verdes Peninsula for many years to come. It is just unfortunate that the Resort was finally completed and opened during the worst financial environment since the Depression.