Bank Grants Ritz-Carlton Owners a Reprieve on Loan

Officials of a Japanese bank who say the owners of Pasadena’s Ritz-Carlton, Huntington Hotel have defaulted on a $106.4-million debt have agreed to a one-month delay in the planned auction of the 383-room luxury hotel.

A Rosemead title company was scheduled to sell the hotel today to the highest bidder.

Thomas Tellefsen, Lary Mielke and a group of limited partners in the Ritz-Carlton have until Aug. 24 to come up with a way to pay off their loan, which two years ago went to transforming the down-at-the-heels Huntington Sheraton Hotel into one of the region’s most elegant hostelries.

The owners’ financial troubles have not affected the operation of the hotel, where rooms are available for $145 to $240 a night.

Tellefsen and Mielke, general partners in Huntington Hotel Associates, emphasized Tuesday that they are both solvent. But circumstances dictate a need to restructure their loan from Dai-Ichi Kangyo Bank, Tellefsen said.

“The reality is that these are very different times from when the loan was made,” he said.

The Ritz-Carlton--which opened in March, 1991, as the Gulf War ended and the recession deepened--has been beset by problems. Hotel industry analysts say the hotel is encumbered with too much debt to operate profitably under current economic conditions.

But the hotel, which is managed by the Ritz-Carlton Hotel Co., has been operating in the black this year, with occupancy rates close to 70%, Tellefsen said.

A lawyer representing the project contractor, Swinerton & Walberg, and a group of subcontractors has said Mielke and Tellefsen also are liable for a sum still due on their contract.

But the contractors’ group, which had sued the hotel owners for $11 million in unpaid bills, was paid a substantial amount by the bank last year, Tellefsen said, and the partners are making regular payments on the balance of that debt.

The current default is “solely a situation between (the bank) and the owners,” Tellefsen said.