Ty Warner, the brains behind the 90s “it” toy, Beanie Babies, is in a bit of a pickle and believe it or not, it’s something his earned billions can’t even help him out of.
Warner is having troubles acquiring an extension on a $345 million securitized mortgage for four of his larger-than-life properties, all luxury hotels, one of them being the New York Four Seasons. With annual revenue decreasing in the world of extravagant hotels, the required numbers to qualify for extensions on loans are hardly being met, so naturally, they’re being put on a strict hold. Warner’s particular four hotels have fallen short of the needed $44.6 million to be extended. The Beanie Baby founder bought the New York Four Seasons, the Four Seasons Biltmore, the San Ysidro Ranch, and the Las Ventanas Resort between 1994 and 2004. Ty Warner Hotels’ other properties include the Montecito Country Club and the Sandpiper and Rancho San Marcos golf clubs.
So if Warner’s income draws his ownership to this many indulgent properties, why is it that the price tag on this particular extension is such an issue? Well, if you take a look at the hotel’s numbers in terms of occupancy rates, directly coinciding with annual revenue, it’s no longer so hard to believe. In a six month timeframe, beginning in January and ending in June, occupancy rates on all four hotels dropped to an astonishing 57.4%. The luxury hotel hit hardest, though, is the New York Four Seasons. The hotel’s cash flow in the last 12 month span of time, ending in June as well, dropped to an agonizing $14.7 million from a much cooler $30.6 million. Did I say he was in a pickle earlier? I meant to say a major, hold on to your seatbelts, it’s going to be a bumpy ride, huge ordeal.
Securitized mortgages are just one way of lending for commercial properties. According to Real Capital Analytics, overall, distressed debt tied to hotels now amounts to $21.9 billion, up from a seriously smaller $1.9 billion a year ago. The company classifies a loan as distressed, as any loan that is either delinquent, in foreclosure, in bankruptcy, or otherwise revised to help struggling borrowers. Well, in this case I would definitely classify Mr. “Beanie Baby” Warner as a struggling borrower. Hopefully, he gets some much needed help. I for one would hate to see any of these properties cease or excessively change faces. Surely we all look forward to spending time in these prime pieces of luxury heaven, so book your stay in one of them now. Let’s get those occupancy rates and annual revenue levels up for Ty and the rest of the Ty Warner Hotels family. I mean, the man did create the cuddly bean-filled toys that kept your children entertained for hours on end. Shouldn’t that be enough incentive to book a stay or two? I certainly think so.
Via: WSJ
