Ritz Carlton Kapalua to be Auctioned

The Ritz Carlton Kapalua is going to be auctioned on May 4th, 2011.

Lehman Brothers received approval in March to put the oceanfront Ritz Carlton Maui up for auction. The foreclosure suit, originally filed in September against Gencom Group, Maui Land & Pineapple Company and other institutional investors, is one of the largest foreclosures in West Maui history.

Originally Lehman Brothers issued $232 million in loans to finance an extensive renovation and condominium conversion plan. The Ritz’s owners planned to repay the loan to Lehman through sales of 107 residential condos, all in one wing of the hotel.

Gencom Group, a Miami-based hotel investment and development company led the renovation and condo-conversion efforts. Between July 2007 and December 2007, the Ritz was closed for renovations. At the beginning of 2008, Gencom announced that 93 binding condo sales contracts had been signed at an average of $1.9 million each.

Most of these projected sales failed to be completed. Of the 93 contacts, only 34 sales were completed. The owners of the Ritz Carlton Kapalua then defaulted on the Lehman Brothers loan in early 2009.

So next month, in May, the 73 unsold residential condos, 297 rooms, common area, commercial property, and 21 undeveloped acres of land will go up for auction collectively as one sale.

Will someone step forth and outbid Lehman on May 5th? We’ll see in less than 30 days.

Photo Credit: Chadh