The Terranea Resort is in default of its $110 million mezzanine financing (secondary financing) with Cascade Investment, led by billionairre Bill Gates. The $480 million resort which opened in Rancho Palos Verdes in June 2009, has also had problems with its construction lender Corus Bank, which has refused to fund its final $12 million construction draw on its $180 million loan.
News of the default was disclosed at the Rancho Palos Verdes city council meeting on Tuesday night where the City decided to terminate the proposed agreement with the Resort to loan up to 80% of the 10% transient occupancy tax back to the resort up to a maximum loan of $8,2 million. This loan was intended to aid the Lowe Enterprises development group in its refinancing attempts, but due to the potential foreclosure action, the City chose to terminate the agreement. If Lowe can finalize their recapitalization, the City Council said that they may be willing to renegotiate the proposed loan arrangement.
The Resort continues to operate and has received rave reviews for its restaurants and hotel operations. Even if the original equity investors were to lose their investment, it is my bet that Lowe Enterprises would still be retained to operate the hotel.
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