Hotel will continue to run business as usual with no layoffs

Guests at the Tigard Embassy Suites hotel near Washington Square likely haven’t noticed much of a change, but the 304-room hotel has filed for Chapter 11 bankruptcy.

The hotel was part of a portfolio of eight hotels across the country owned by Patrick Nesbitt, which filed for Chapter 11 bankruptcy protection on July 31.

Along with the Tigard location, Embassy Suites Nesbitt owns in Texas, Colorado, Michigan, Ohio and in Bellevue and Lynnwood, Wash., also filed for bankruptcy.

The hotels are owned by Nesbitt’s Windsor Capital Group, based in Santa Monica, Calif.

Nesbitt, who lives in Santa Barbara, Calif., is looking for protection from creditors while Windsor restructures $175 million in debt it owes to US Bank.

But Craig Stechman, senior vice president of sales and marketing at Windsor, said the hotel would not be making any layoffs and was not at risk of closing.

“We have assured our staff that it is business as usual,” Stechman said. “These hotels have always provided a good cash flow, and we pay our bills.

“All the hotels are operating as they have in the past ... Unless you knew that we filed, you wouldn’t notice any difference.”

Windsor received a $187.5 million loan to refinance the hotels in 2006, Stechman said.

The eight hotels still owed a combined $175 million, when the loan matured on Feb. 6, 2011, according to court documents.

Stechman said with the down economy and poor market for hotels nationwide due to the recession, Windsor attempted to refinance the debt with US Bank and loan servicer, Torchlight, more than a year before it came due.

“The evaluation of hotels would have been much higher (in 2006),” Stechman said. “When you are doing a debt-to-loan ratio now, it’s a lot different from what it was five years ago.”

Stechman said the lenders refused to work with Windsor on restructuring the debt until a few months before the debt came due.

Those talks have lasted more than a year until US Bank sued the hotels and tried to appoint a receiver to take over their management.

The bankruptcy filing halts those proceedings for the time being.

“We filed in order to give us time to restructure,” Stechman said. “We are using this time to reorganize and restructure the debt and raise renovation funds for several of our hotels.”

In addition to the $175 million debt, Windsor also needs about $50 million in renovations to renew its license with Hilton, Embassy’s parent company.

Nesbitt said in court filings that several potential lenders have expressed a willingness to provide the full financing needed to complete the improvements.

Nesbitt started Windsor in 1974. The company operates 22 hotels across 11 states, making him one of the largest owners of private Embassy Suites across the country.

Many of the eight hotels have been owned by Windsor for more than 25 years.

“We have had a good history and good reputation in Tigard,” Stechman said. “Our plan is to continue to manage it and renovate it and move forward.”

Contract Publishing

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