BDC/Anaheim LLC, Bowen’s company, failed to make timely payments on $127 million it borrowed to build the hotel, the lender, 3650 REIT Anaheim LCC, alleged. The company filed a default notice with the Orange County Recorder’s Office on Nov. 13, demanding an immediate refund. Along with fines, fees and court costs, 3650 REIT Anaheim said it owes Bowen a total of $145 million. The lender says it intends to sell the property through foreclosure if it is not repaid.
Bowen’s representatives confirmed the default notice. “Due to conditions surrounding the hotel market in Anaheim, the private entity that owns The Viv Hotel was unable to sell or refinance the hotel prior to the maturity of the loan,” Bowen’s representatives said in a written statement. “While discussions are currently underway with the lender, the lender has filed a notice of default on the property to further pursue its rights under California law.” They said the hotel was open.
What this means for Bowen’s Block 216, if anything, is unclear. Each of the buildings is controlled by private limited liability companies, a structure typically used to protect complex development projects from the same developers’ legal or financial liabilities of other projects.
In November 2018, workers decided on the site for the Viv Hotel. The target market was young families going to Disneyland. Some of the hotel’s rooms are equipped with bunk beds for children, and its rooftop pool and deck offer unobstructed views of the nightly Disneyland fireworks.
The hospitality business has collapsed during the pandemic. Most hotels have been closed for months, while others remain largely empty. According to local real estate brokers, by the summer of 2023, the good times are back. Orange County hotels boast a 72% occupancy rate, the second-highest among West Coast markets, according to brokerage Marcus & Millichap. Disneyland attendance is back to pre-pandemic levels, the broker said.
Bowen relied on private investors, some of them Oregonians, for hundreds of millions of dollars in financing projects. Block 216 defied great odds will open its doors in October. Building the first 5-star hotel in the Pacific Northwest seemed ambitious even before the pandemic. But inflation, high interest rates and supply chain issues have complicated the construction process, pushing the cost up to $600 million.
Bowen officials said the hotel has been busy. NBA teams began using the hotel to host Portland Trail Blazers games in town.
Opening the hotel’s doors doesn’t mean a finish line for Bowen. Now comes the hard part: convincing the wealthy to invest and live in downtown Portland. In addition to the hotel and offices, the tower is included 132 condominiums carrying the Ritz-Carlton brand — and a fancy price tag. Bowen and his team must convince deep-pocketed prospects that Portland still has its mojo, that it still has the quirky creativity and soft-spoken passion that helped put the city first on the cultural map. And they need to do it fast. Each day the apartments go unsold, increasing the cost of servicing the debt on the $400 million construction loan that financed the project.
So far, Bowen’s team has closed on the sale of at least one of the building’s 132 condominiums, filings show Tuesday. Documents filed with the Multnomah County Recorder’s Office in November show the Berkeley, Calif., couple purchased 2,404 units. They got a bargain price of $841,000. List prices for units in the building started at $1.1 million. In an email, Bowen representatives said discounts are often given to early buyers.
“With a new development such as Unit 216, discounts are offered to potential first-time homebuyers and those purchasing at various stages of construction,” they said. “While we cannot comment on this individual sale, we can share that, as is common with these types of developments, discounts are being offered to early stage buyers during the pre-construction and construction phases. The building is still under construction and some discounts are still available for interested buyers.”
— Jeff Manning; jmanning@oregonian.com
