It was probably around that time that Sunstone realized the 11 hotels, including five in Southern California, three in New York, two in Utah and one in Atlanta, were worth about $173 million. As the San Clemente, Calif.-based investment group ruminated on those numbers, I'm sure they came up with the idea of how to free themselves from debt and make more money -- by walking away from the mortgage.
"[Sunstone] is in a much better place, more delevered, better credit statistics and much stronger," Sunstone chief executive Art Buser told the WSJ.
I bet it is.
It should be no surprise to any of Sunstone's creditors, since six months ago the company already suggested it would be sending jingle mail to its lenders when possible. Last June, it defaulted on it W San Diego property and sold off a Riverside, Calif. hotel for $19.3 million, leading many analysts to believe the REIT bought at the height of the market and would have to sell or default.
In the end, it only made sense to walk away from the loan. Sunstone has shown itself to have no problem dissolving relationships when it comes to money, and perhaps that's the best operating procedure. Saving $73 million may well be worth the bad publicity and bad credit.