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CMA
October 05, 2018  

Goldman Wins Floater on Maui Ritz-Carlton

Goldman Sachs has agreed to write a $215 million floating-rate loan to refinance a resort hotel on the Hawaiian island of Maui.

The bank will securitize the loan on the Ritz-Carlton Kapalua in a stand-alone offering next month. The borrower, a partnership that includes Ares Management of Los Angeles and Square Mile Capital of New York, will use the proceeds to retire existing debt.

The luxury beachfront property encompasses 404 hotel rooms and condominiums — 43 of which are separately owned and won’t be part of the loan collateral. The Ares team, which also includes Wafra Investment of New York and Honolulu-based Trinity Investments, bought it in 2016 for $173 million.

The hotel has changed hands several times in the past dozen years. A Goldman unit — Whitehall Street Real Estate — partnered with Gencom Group of Miami and Highgate Hotels of New York to buy the property in 2006 for $175 million. The following year, it obtained a $232 million loan from Lehman Brothers and shut the hotel to conduct a $190 million renovation. In the process, it converted 107 hotel rooms to for-sale condominiums.

The property reopened in 2008 — just as the recession was slamming the Hawaiian hotel market. That depressed the Ritz-Carlton’s performance, and the Goldman team was unable to sell most of the condos. Lehman foreclosed on its loan in 2011. A partnership between Los Angeles investors Colony Capital and Woodridge Capital bought the property from Lehman in 2014 for $142 million. By that time, the market was on the upswing. The Colony team gave the hotel a fresh round of upgrades before selling it to the Ares partnership.

The unsold condos are operated as hotel rooms, and the separately owned units also provide revenue, as the hotel rents them out when they aren’t being used by their owners. The 2016 marketing campaign for the property noted that some two-bedroom condos can be divided to create a maximum of 463 hotel rooms.

The Ritz-Carlton carries a five-diamond rating from AAA. The 54-acre property has 173,000 square feet of outdoor meeting space and 35,000 sf indoors, including Maui’s largest ballroom. There are seven restaurants or bars, a 17,500-sf spa, a three-tiered swimming pool, a fitness center and shops.

The hotel is within the 22,000-acre Kapalua Resort, which also includes separately owned residences, retail space and recreational facilities. Hotel guests have access to Kapalua Resort’s two championship golf courses. There is also a golf academy and several white-sand beaches.