With no sale, Applewood Inn faces loan default

GUERNEVILLE ? The owners of the high-end Applewood Inn, an 18-room bed and breakfast that has been for sale for two years and purportedly attracted potential domestic and international buyers, have defaulted on a nearly $2 million loan on the property.

San Rafael-based Westamerica Bank, which acquired noteholder National Bank of the Redwoods, filed a notice of default on an August 1999 loan for $1.89 million to innkeepers Jim Caron and Darryl Notter, according to public records. The partners owed $28,204 as of Jan. 26, according to the filing.

Mr. Caron deferred comment to Dick Ballard Inc. of Walnut Creek. The firm describes itself as a buyer of California real estate mortgages and deeds of trust. Mr. Ballard declined to comment.

If the default is not settled, the inn could face a forced sale.

Applewood went on the market in mid-2003 for $7.75 million then again in March 2004 for $6.5 million. The asking price when it went off the market in November was $4.98 million, according to Pacific Union Real Estate's Mariann Ilaria, who marketed the property with her husband, John Stackelberg.

"We had quite a few written and verbal offers that did materialize, and we could have sold it several times over at market value," Mr. Stackelberg said. "We heard from experts that market value for it was in the low- to mid-$4 million range as of last fall."

Integral to that valuation was location, Ms. Ilaria said.

"The owners created a world-class facility over the past 20 years," she said. "If it could've moved to Healdsburg or Sonoma, we wouldn't be having this conversation."

The brokers said they averaged a couple of tours a week of the property with qualified buyers, including an investment group in Japan that took three tours, a top San Francisco restaurateur, wineries and owners of major hotels.

Meanwhile, the pool of buyers for North Coast inns seems to be growing, particularly for income-producing properties, according to Valerie Shannon, who specializes in those type of properties for Sothebys International Realty.

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