Citi seizes St. Regis

Owners of the 400-room Dana Point property have been negotiating for weeks with mezzanine lender Citigroup, but they apparently couldn't come to terms. The resort missed payments since April on a $70 million loan from Citigroup. The resort's $230 million mortgage isn't in default, the WSJ reports. Hotel, golf club and beach club will continue to operate.

The St. Regis has suffered like other luxury hotels amid a steep decline in leisure and business travel during the recession. The resort's bookings also deteriorated due to the public outcry over AIG's $440,000 retreat there last September, according to a person familiar with the matter. The retreat came shortly after AIG received billions of dollars in federal aid. Outrage over the junket led several financial-services companies to cancel conferences at luxury resorts thereafter. Occupancy at the Data Point resort in the first quarter of this year was about 20% less than the same period last year, according to a person familiar with the matter. At times this year, the hotel was only 15% occupied, the person said.