|By Mark Basch, The Florida Times-Union,
JacksonvilleMcClatchy-Tribune Regional News
Mar. 3, 2010--Although the Sawgrass Marriott Golf Resort & Spa lost some business last year because of the recession, the resort did operate profitably in 2009. But an abrupt decision by the resort's lender to foreclose on the property, rather than continue negotiating a debt restructuring, forced its owners into bankruptcy, according to court filings.
RQB Resort LP and RQB Development LP, two Irish investment partnerships that own the Sawgrass Marriott, filed petitions Monday for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Jacksonville. In a news release Tuesday, general manager Jeff Mayers said the resort is continuing normal operations after the bankruptcy filing.
The Sawgrass Marriott in Ponte Vedra Beach's facilities include a tower with 348 guest rooms and three restaurants, golf villas with 160 rooms and a beach club with three restaurants. The resort is also the exclusive partner to the PGA Tour's Tournament Players Club at Sawgrass, giving hotel guests access to the club's golf courses.
According to court filings, revenue at the resort fell from $56.7 million in 2008 to $42.6 million last year. It remained profitable, but operating income fell from $11.3 million in 2008 to $7.5 million in 2009.
Court papers also show that the resort expects to continue generating positive cash flow while in Chapter 11. It projects to increase its cash balance by about $300,000 over the next five weeks.
However, the decline in business last year did reduce the owners' liquidity, and caused them to seek a debt restructuring. The RQB partners bought the Sawgrass Marriott for $220 million in 2006 with financing from Goldman Sachs Commercial Mortgage Co. RQB has also spent $30 million to upgrade the facilities since buying the property.
RQB began negotiating a debt restructuring in March 2009 with Goldman Sachs, which is owed $193 million. But in October, Goldman Sachs informed the partners that it intended to foreclose on the resort instead, according to an RQB court filing.
"When asked in early November why the restructuring was no longer an alternative, Goldman Sachs stated that its management had changed its mind and preferred to own the resort," the filing said.
A Goldman Sachs spokesman said Tuesday he could not comment on the matter.
RQB began seeking other investors to raise capital to reduce its debt, but Goldman Sachs began the foreclosure process in January.
"Goldman Sachs had a hearing scheduled for today [Tuesday] in the foreclosure process," said Stephen Busey, an attorney for RQB. When Goldman Sachs declined a request to postpone the hearing, RQB was forced to file Chapter 11 to protect itself against the foreclosure, he said.
"This process will protect the resort and allow us to continue to operate business as usual," Mayers said in the resort's news release.
Busey said he's confident that given time, RQB will be able to raise additional capital. RQB said in court filings that it expects the resort industry to rebound in 2011.
Sawgrass Marriott said there will be no changes to employees because of the bankruptcy filing. The resort has 435 employees but they do not work for RQB. They are employed by Interstate Management Co., which operates the resort under a management agreement with RQB.
A PGA Tour official said the bankruptcy should have no bearing on the operation of TPC Sawgrass, which is independently owned and managed by a subsidiary of the PGA Tour.
"From our standpoint, it will be business as usual in our dealings with the Marriott property," said David Pillsbury, president of PGA Tour Golf Course Properties. "We anticipate an outstanding year at TPC Sawgrass, including playing host to The Players Championship May 3-9 and the Nationwide Tour's new Winn-Dixie Jacksonville Open in October."
RQB said in court papers that the current recession has reduced revenue at high-end resorts like the Sawgrass Marriott by 30 percent, including a significant drop in convention business. Those conditions sent another major Northeast Florida resort into Chapter 11 when the Amelia Island Co., owner of the Amelia Island Plantation, filed for bankruptcy in November.
That case is still pending in U.S. Bankruptcy Court in Jacksonville. But Amelia Island Co.'s attorney, Richard Thames, said Tuesday he is hopeful it can emerge from bankruptcy by June.
"We expect to have a [reorganization] plan filed within the next 30 days," he said.
Thames said Amelia Island Co. has been seeking possible buyers for the resort. When it filed for Chapter 11, a group of Plantation homeowners was considering an investment in the property. Thames said the company is still working with the homeowners, as well as other potential bidders, to find the best plan to get the resort out of bankruptcy.
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