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The former owner of downtown’s W Hotel — which they walked away from and has now foreclosed — wants to take over the Manchester Grand Hyatt.

The W’s former owners, Sunstone Hotel Investors, Inc., have also walked away from three other hotels in Old Town and downtown in the past year.

Now Sunstone wants to acquire the Manchester Grand Hyatt, as it said July 16 in a joint letter with owner Doug Manchester, according to a memo about the proposal from the Unified Port of San Diego.

Manchester’s previous plan was to give up a major stake in the hotel to the parent Hyatt chain and keep a minority piece, a plan the Board of Port Commissioners approved earlier this month. The memo states that Manchester and Hyatt were “unable to consummate the transaction.”

The port has not yet scheduled the proposal for its August or September meeting, said Port spokesman John Gilmore. The port asked for more documents to clarify the proposed relationship between Sunstone and Manchester, consent forms from the involved lenders, and evidence from Manchester and Hyatt that the previous plan fell through. Port officials also asked to review Sunstone’s ownership structure and investment strategy.

The port has to sign off on any ownership change because the hotel’s a port district tenant.

Gilmore said the port doesn’t know how much Sunstone would pay for the property.

Sunstone’s high-profile decision to mail the keys back to the bank on its W Hotel investment came when the company deemed the hotel underwater last year. Sunstone paid $96 million near the market peak in 2006, financing its purchase with a $65 million mortgage. The company estimated its principal payments were 30 times the amount of expected cash flow in 2009.

In the last year, Sunstone has also defaulted on the Marriott San Diego in Old Town, a Holiday Inn in downtown San Diego and a Holiday Inn Express in Old Town.

Distress in San Diego’s overleveraged hotels has been growing. When I spoke to Sunstone Executive Vice President Ken Cruse in March, he said running those four hotels was a money-drain for the company.

But in that interview, he told me, “We like San Diego quite a bit long-term.”

Long-term apparently looks like a few months for Sunstone.

Sunstone’s debt restructuring — otherwise known as walking away from hotels here and in other cities — was an effort to position the company to acquire prime properties like the Hyatt, Gilmore said.

“I mean, it’s a grand place, as they say,” he said.

Neither Cruse, from Sunstone, nor Doug Manchester returned a call for comment as of Thursday afternoon.

— KELLY BENNETT

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