NEW YORK CITY A lender group led by billionaire John Paulson has reportedly seized control of eight U.S. luxury hotels controlled by Morgan Stanley’s real estate funds.
The hotels in question are former CNL Hotels & Resorts Inc. properties that were acquired by Morgan Stanley in 2007 for US$6.7 billion. The assets seized by Paulson include Grand Wailea Resort Hotel & Spa, Maui; La Quinta Resort & Club and PGA West in La Quinta, California; Arizona Biltmore Resort & Spa, Phoenix; Doral Golf Resort & Spa, Miami; The Ritz-Carlton Orlando; JW Marriott Orlando Grande Lakes; JW Marriott Desert Ridge Resort & Spa, Phoenix; and Claremont Resort & Spa in Berkeley, California. The eight properties have a total guestroom count of nearly 6,000.
The portfolio seizure was executed last week through a US$600 million debt restructuring related to the 2007 CNL acquisition, sources tell Bloomberg. Under terms of the restructuring, US$200 million of corporate debt is extinguished and US$400 million is converted into equity, Bloomberg reports.
In addition to hedge fund Paulson & Co., the lender group includes Winthrop Realty Trust, Capital Trust Inc. and Morgan Stanley’s special property group.
