THE IRISH owners of the high-profile Sawgrass hotel and golf resort in Florida have won a significant court battle with Goldman Sachs, which had sought to gain control of the facility following a default on a $193 million loan.
On Monday, a US Bankruptcy Court judge in Jacksonville, Florida, denied Goldman Sachs’ request to foreclose on the resort. Instead, the Irish directors behind the resort have been given until December 29th to present a reorganisation plan to the court, on which creditors can then vote.
RQB Resort LP and RQB Development LP are now under Chapter 11 bankruptcy protection. The two US-registered companies control a hotel, spa, golf villas and other properties at the plush 65-acre resort.
The resort was purchased in 2006 for $220.55 million by a consortium of 100 Irish investors put together by financier Niall McFadden. They subsequently invested $30 million in upgrading the property. The consortium invested $95 million in equity and secured a large loan from Goldman Sachs, of which $193 million remains outstanding.
It is understood that RQB has engaged Jones Lang La Salle, a New York-based property investment bank, to seek new equity for the business as part of their rescue plan.
The Irish investors were informed yesterday that their equity value has been wiped out.
The property was recently valued at $135.3 million in an appraisal ordered by Goldman. But David O’Halloran, chief executive of RQB’s US operation, told the Florida court the group believes the resort should be valued in the $90 million to $100 million range.
It will now be up to the court to determine a value for the property, which will have implications for how much Goldman Sachs can recoup on its loans.
Goldman Sachs declined to comment on the case yesterday.
In a court filing in March, the two RQB companies stated that the economic downturn resulted in revenue declining by 25 per cent last year to $42.6 million. Net operating income fell by more than 30 per cent to $7.45 million.
This resulted in its owners being unable to service their debt with Goldman Sachs Commercial Mortgage Capital. No payments have been made to Goldman Sachs since August 2009.
The RQB companies say they entered discussions with Goldman Sachs almost a year ago about restructuring the loan. The two sides looked at extending the payout term by three to four years and reducing the interest rate to allow the loan be serviced by the resort’s operating cash flow.
But last October Goldman Sachs informed RQB’s backers that it wanted to foreclose on the resort. The Irish-backed companies sought an extension and engaged Jones Lang LaSalle in December 2009 to secure $40 million to pay to Goldman Sachs as part of a debt restructuring.
This process came to nothing.
The resort comprises a 448-bed hotel operated by Marriott; The Spa at Sawgrass; 83 two-bed golf villas; and the Cabana beach club, which faces onto the Atlantic and has 780 members.
The resort is also an “exclusive partner” to the PGA Tour’s Tournament Players Club at Sawgrass, which has two golf courses.
