The roots of the problem could be found starting last year, when Sunstone Hotel Investors, owner of the San Diego W, stopped paying the mortgage on the
That sounds like reasonable leverage, less than 70%, given the frothy
financing of the times. But here’s the rub – the company estimated its principal payments were 30 times the amount of expected cash flow in 2009. That’s an accountant’s nightmare and a serious problem. And It didn’t help that half a dozen swanky new hotels were built only blocks away.