The Trump Organization has signed an agreement to pay $170 million for the deluxe golf resort near Miami making Trump the lead bidder in a future auction of the property.
Donald Trump is eyeing a return to his traditional stomping ground: U.S. real estate, reports the Wall Street Journal.
Trump’s company, which all but stopped investing its own money in large property deals in recent years, has signed an agreement to pay $170 million for the Doral Golf Resort & Spa, Miami, Fla., according to people familiar with the matter. It would be the company’s biggest U.S. real-estate investment since the recession, reports the WSJ.
The Trump Organization has cut a deal to buy the resort, with its 700-room hotel and four of its five professional golf courses. The seller, a joint venture of hedge fund company Paulson & Co. and landlord Winthrop Realty Trust, put the Doral into bankruptcy protection along with four other resort properties in February.
The agreement, which is expected to be filed in a New York bankruptcy court next week, is far from certain. Rather, it establishes Trump as the lead, or “stalking horse,” bidder in a future auction of the property, and Trump’s is the bid to beat.
While the $170 million price tag is far from a peak price, the resort market has recovered since the depths of the downturn. A final deal would have to be approved by the bankruptcy court.
If Trump wins the Doral resort, the company plans to spend about $150 million on improvements, reports WSJ.
The Doral resort is part of a portfolio of eight resorts purchased in 2007 by Morgan Stanley Real Estate Fund V, including the 780-room Grand Wailea resort in Hawaii and the 739-room Arizona Biltmore in Phoenix. Burdened by billions in debt, Morgan Stanley ceded control of the resorts to a group of junior creditors led by the Paulson-Winthrop group in January.
But that group still had to repay five of the resorts’ mountainous senior debt of about $1.5 billion that matured in February. Unable to do so, the lenders placed those properties into Chapter 11 bankruptcy protection.
On Friday, the Paulson-Winthrop group struck a deal with some lenders to extend the bankruptcy case through August of next year, effectively buying the owners more time to recapitalize the portfolio, and pay off some of its $1.5 billion in debt.
In September, an unidentified stalking-horse bidder emerged, willing to pay $170 million for the Doral, but the deal failed to gain traction in the past month, according to people familiar with the matter, paving the way for the Trumps to make an offer.
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