RTC Seeking Buyer for Beverly Heritage

COSTA MESA — A bronze time capsule is buried in the courtyard of the Beverly Heritage, planted there when the hotel was built six years ago. It contains such mementos as a 1986 schedule for the nearby Orange County Performing Arts Center’s premiere season.

Fate willing, the capsule will be unearthed in the year 2086. And no doubt the Resolution Trust Corp. hopes that by that time it will no longer own the then-century-old vessel’s resting place.

The RTC, conservator of failed thrifts, took possession of the 238-room hotel Friday when a foreclosure sale did not attract a single bidder. Now begins the arduous task of marketing a hotel worth scantly more than half of the price it commanded just four years ago.

The Beverly Heritage Hotel’s former owner was already in default on payments to its lender, Los Angeles-based First Network Savings Bank, when the RTC seized the thrift in January, 1990. Fargo Industries, a financially troubled real estate company in La Jolla, bought the Beverly Heritage for $21.6 million in 1988 from its original owner, Northview Corp. in Los Angeles.

First Network owned the hotel’s six-acre land lease, which the RTC inherited two years back. As of last week, the RTC became owner of both the land and the building.

The Costa Mesa hotel was offered for a deal at the foreclosure auction--$6.2 million, the amount still owed on the second deed of trust. However, the deal came with an imposing caveat--the new owner would assume the first deed, $14 million plus accrued interest.

“I’m not surprised that nobody came to the party,” said Donald W. Wise, a hotel broker with C.B. Commercial Real Estate Investment Banking Group in Anaheim.

Given today’s weak real estate market--and the fact that the hotel was never successful enough to offset its debts--the Beverly Heritage’s value has fallen to about $12 million, Wise said.

“Hotels built between 1985 and 1990 are worth around 45 cents on the dollar if they have to be sold,” Wise said. “Regrettably, the RTC probably will have to take a loss. Welcome to 1992.”

An attractive hotel with moderate room prices, the Beverly Heritage’s opening coincided with the debut of the Performing Arts Center in the autumn of 1986. It has never enjoyed a smooth ride, and its occupancy rate over the past year has only averaged about 50%.

“The South Coast Metro is a very overbuilt area for hotels,” Wise said. “It’s a secondary sub-market, competing with the more popular airport area.”

In the next few weeks, the RTC will round up a broker to help sell the property, said Mike O’Brien, project director for OBCO/Churchill--a Seattle asset management company under contract with the federal agency.

“We will be getting a marketing strategy together,” O’Brien said. He added that the hotel is “one of RTC’s nicest pieces of property.”

Two other luxury hotels in Orange County are also under the thumb of the RTC--the Hyatt Newporter and the Irvine Marriott.

The Beverly Heritage has endured a somewhat tumultuous history in its brief life. Its developer, Northview Corp., was headed by Ivan F. Boesky until 1987. Boesky was forced to sever his ties to Northview after settling insider trading charges with the Securities and Exchange Commission.

Government Accommodations The Beverly Heritage Hotel joins two other luxury hotels in Orange County in the hands of the Resolution Trust Corp.

Name Number Year Former Federal Location of Rooms Built Owner Takeover Hyatt Newporter l 410 *1961 Columbia S&L; Jan. 1991 Newport Beach Beverly Hills Irvine Marriott 485 1982 Mercury S&L; Feb. 1991 Irvine Huntington Beach Beverly Heritage Hotel 238 1986 First Network Savings Jan. 1990 Costa Mesa Los Angeles

* Renovated in 1985 Source: Resolution Trust Corp.