Lehman Brothers successor forecloses on Ritz-Carlton Kapalua

LAHAINA, HAWAII The estate of bankrupt Lehman Brothers Holdings Inc. has filed court papers to foreclose on The Ritz-Carlton, Kapalua, with the joint venture that owns the property in default on a US$255 million mortgage for more than a year.

The 563-key condo-hotel on the western shore of Maui will continue to be managed by Ritz-Carlton through the foreclosure process.

The property, owned by a venture of Gencom Group and Whitehall Street Global Real Estate LP, got into financial trouble after a poorly-timed attempt to convert 107 guestrooms into condominiums, The Wall Street Journal reports. The owners do not intend to fight the foreclosure.

The Ritz-Carlton, Kapalua, was acquired in 2006 for US$175 million, with Lehman serving as the chief creditor. The subsequent condo renovation cost about US$160 million, but the Journal reports that only 34 of the 107 condo units have been sold.

The Ritz-Carlton, Kapalua
The Ritz-Carlton, Kapalua