Several prominent luxury resort properties, including Miami’s famed Doral Golf Resort and Spa, were caught in a debt-restructuring shuffle as 2011 began.
Several prominent luxury resort properties, including Miami’s famed Doral Golf Resort and Spa, were caught in a debt-restructuring shuffle as 2011 began that eventually led to them being named in a Chapter 11 bankruptcy protection filing.
The other properties in the filing—made by a lending group that includes New York-based Paulson & Co., one of the world’s largest hedge funds, with $36 billion of assets under management, according to Bloomberg.com—included the Grand Wailea Resort Hotel & Spa in Maui, Hawaii; La Quinta Resort & Club and PGA West in La Quinta, Calif.; the Arizona Biltmore Resort & Spa in Phoenix; and the Claremont Resort & Spa in Berkeley, Calif.
Collectively, the filing said, the five resorts had $2.2 billion in assets and $1.9 million in debt as of November 30, 2010. Total revenues were put at $465 million for 2010, with the five properties paying management fees and expenses of about $16.1 million a month.
The five resorts and three other properties that didn’t seek court protection—the Ritz-Carlton hotel in Orlando, the JW Marriott Orlando at the Grande Lake Resorts, and the JW Marriott Desert Ridge Resort & Spa in Phoenix—were all acquired in a foreclosure auction on January 28 by CNL-AB LLC, a joint venture that includes Paulson, Winthrop Realty Trust and Capital Trust, Inc., which controls the three properties held out of the filing.
CNL-AB LLC held junior debt that helped to finance Morgan Stanley’s $3.3 billion purchase in 2007 of CNL Hotels & Resorts, Inc. When Morgan Stanley defaulted on debt that remains from that purchase, CNL-AB LLC seized the eight properties acquired by Morgan Stanley from CNL’s portfolio.
CNL-AB LLC next attempted to restructure and extend a $1 billion mortgage, and $500 million in additional debt backed by five of its new holdings, that was coming due on February 1. When that restructuring attempt failed, CNL-AB LLC made the bankruptcy filings, which it said would have no impact on the management, staff or operations of the resorts.