The proposed purchase of the La Valencia Hotel in La Jolla and the Rancho Valencia Hotel and Spa in Rancho Santa Fe by San Diego-based American Property Management Corp. has been officially terminated.
It was announced that the La Valencia was off the block for now and ownership of the two hotels will remain with the Collins Family.
They have signed a long-term management contract with Auberge Resorts, which will oversee the daily operations of the two hotels. Under the agreement, the La Valencia will be an affiliate hotel and the Rancho Valencia will be branded an Auberge Resort.
Michael Gallegos, president and CEO of AMPC, said he would not comment on the deal, but in May he told the La Jolla Light that it was an enormous challenge trying to get a deal of this magnitude done in the current lending environment.
"Our timing could not be worse," he said then. "There were indications that things weren't looking good, but no one could have predicted it would have been this bad."
Jerry Morrison of La Jolla-based Morrison and Co., who knows the current market but is not presently involved with any of the parties, said that it came as no surprise to him that the deal did not go through.
He said that financing in today's economy is extremely difficult, even for the most credit worthy of buyers. He pointed out that in the current financial climate lenders are requiring substantial commitments in the range of 40 to 45 percent on the part of buyers. Many of his clients have not been able to secure financing at any rate, because there just isn't anyone who will handle these types of transactions, he added.
Cameron Larkin, managing director of Larkin Hospitality Finance in Dallas, Texas said that marquee deals in the $100-million range are suffering because the typical lenders on a project of that size are Wall Street-based investment banks that are currently in "problem-fixing mode.
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