By Mark Anderson - Staff Writer
Feb 14, 1999, 9:00pm PST
The Expo Heritage Inn -- better known as the Beverly Garland -- might be bought out of bankruptcy by a Southern California company that wants to turn the 205-room hotel into a home for assisted living.
Owner Ron Pitamber put the hotel into Chapter 11 bankruptcy on Dec. 17, listing $6.8 million in debt and assets of $7.3 million.
According to bankruptcy court documents, Prime Medical Facilities, based in Tarzana, has offered to buy the hotel and its 7.5 acres for $8.1 million in cash. The offer will be heard in bankruptcy court in Sacramento on Feb. 25.
"If the sale is consummated, it would be a a very short-lived and very successful bankruptcy," said Robert Bardwill, an attorney working for Pitamber. "The sale would in essence pay off all the creditors."
It would also be a relief for Pitamber, who paid $6.2 million for the hotel in May 1996.
Other buyers could also make offers at the court hearing,
"On the same deal, we have a number of other offers -- some for much more than what we are selling if for," Pitamber said. "There are three other offers floating around out there. We'll see what happens."
What caused the hotel to be placed into bankruptcy, Pitamber said, "is a very long story," and he declined to go into it.
Prime Medical Facilities plans to turn the hotel into an assisted living facility, which is a more independent and less medically intensive environment than a nursing home. The company declined to talk about its plans.
Pitamber is president of the Expo Heritage Inn, a corporation that owns the hotel at 1780 Tribute Road. He also owns Roseville-based Heritage Inns and Suites, which owns 18 hotels in Northern California and operates 21 hotels. The bankruptcy involves only the Expo Heritage Inn.
Pitamber bought the Beverly Garland Hotel in April 1996 from the Carpenters Pension Trust Fund of Southern California, which had foreclosed on it in December 1992.
Pitamber changed the name and started some remodeling work. He said at the time he planned to spend $1.5 million on remodeling. To make the hotel profitable he needed to bring it from 45 percent occupancy at a $49 average room rate up to 75 percent occupancy with a rate of $62.50.
But the hotel never performed well.
"The issue for a lot of older hotels is what is the highest and best use is. There comes a time when the highest and best use is not being a hotel," said Holden Lim, a hotel analyst with HVS International's San Francisco office. "That might be the case for this hotel. It was built in the older, sprawling style, and that is functionally obsolete as a hotel these days."
If the hotel is sold, the court would pay off creditors. Nearly $6.2 million is secured debt. The largest creditor is the Carpenters Pension Trust Fund of Southern California, which holds a first deed of trust for $4.9 million. Sacramento County is owed $230,000, and a Southern California investor, David Pick, who holds a second deed of trust, is owed $1 million.
More than 200 unsecured creditors are listed in the bankruptcy filing. They are owed a total of $657,618. The unsecured creditors include the city of Sacramento, owed $185,068; Sacramento city utility service, owed $23,942; the Sacramento Municipal Utility District, $30,178; the Internal Revenue Service, owed $142,604; the state Employment Development Department, owed $8,183; Pacific Bell, owed $36,000; and Sysco Food Services, $26,617.
The Garland has underperformed since it was built in 1980 at a time when hotel construction was escalating locally. The Red Lion Hotel (converted to a Doubletree Hotel in 1997) and the Holiday Inn Capitol Plaza had just been built and the Sacramento Hilton opened in 1985. The three other hotels were larger, had more conference space and all had regional or national reservation systems.
Overbuilding, strong competition, the lack of a franchise and a location on a dead-end street drained the resources of the four original owners, Fred and Wilma Dickerhoff, and actress Beverly Garland and her husband, Fillmore Crank.
The carpenters pension fund took the Beverly Garland back in foreclosure in 1992 and tried for years to sell it.
In 1993, Home Depot, the building supply chain, wanted to buy the freeway location, level the hotel and build a store. Neighborhood opposition killed that plan.
Next it looked like Bethany Bible College, based in Scotts Valley in Santa Cruz County, would convert the hotel into a college with dorm rooms. That deal collapsed when the college couldn't sell its land in Scotts Valley.
The hotel's namesake was the heroine of the Lon Chaney Jr. horror movie, "The Alligator People," and the television wife of Fred MacMurray in the last three seasons of "My Three Sons."