Gaw Capital Defaults on $100M Loan Tied to Oakland Marriott

Gaw Capital USA has defaulted on a $100 million loan secured by the 500-room Oakland Marriott City Center, which may be veering toward foreclosure.

The Los Angeles unit of Gaw Capital Partners, based in Hong Kong, skipped one or more payments for the loan tied to Oakland’s largest hotel at 1001 Broadway, in Downtown Oakland, the San Francisco Business Times reported.

A New York branch of France-based Natixis lent Gaw Capital USA $80 million in 2017, and $20 million more two years later. It’s not clear when Gaw defaulted on the loan.

Gaw Capital bought the hotel in 2017 for $143 million, or $286,000 per room.

The default comes after hotel closures and a plunge in hospitality values across Oakland, where landlords have faced challenges paying off prepandemic loans by maturity deadlines.

Declines in local market pricing and relative debt mean the Oakland Marriott City Center may be hard to sell, according to the Business Times. Oakland’s largest hotel looks like a likely candidate for foreclosure, said Alan Reay, president of Irvine-based Atlas Hospitality, which studies hotel markets.

“If the lender doesn’t pursue a personal guarantee on [Gaw Capital founder] Goodwin Gaw, then it’s probably another situation of ‘here’s the keys, guys,'” Reay told the Business Times. “It’s nowhere near worth what the debt is on it, even if the debt was paid down somewhat.”

Across the nation, there are more than 350 hotels with commercial mortgage-backed securities loans on watchlists, representing up to $6 billion in debt, he said. Some 43 of those hotels are delinquent on about $1.5 billion in loans.

Lodging analysts say public safety remains the big concern in Oakland, as business closures blamed on crime and viral thefts have dented the city’s image for investors. Empty offices Downtown and an exodus of major sports teams have choked off a hospitality recovery.

Last month, the historic 145-room Waterfront Hotel in Oakland’s Jack London Square shut its doors, according to the Business Times.

Lenders for the Radisson Hotel Oakland Airport, meanwhile, are suing the owner, an affiliate of K&K Hotel Group, to foreclose on the 289-room hotel.

Last summer, Beverly Hills-based developer Hawkins Way Capital, owner of the 276-room dual-branded AC Hotel and Residence Inn by Marriott Downtown Oakland, defaulted on a $101 million loan scarcely a year after opening.

Core Capital, a minor investor in Oakland Marriott City Center, recently acquired the 162-room Courtyard Oakland Downtown for $10.6 million, or $65,432 per room, a 76 percent discount from Gaw Capital Partners’s purchase price in 2016, according to the Business Times.

— Dana Bartholomew