Hawaii Timeshare Back On Course with New Financing Agreement
Saturday, February 14, 2009
Development is back on track at the Ritz-Carlton Club and Residences at Kapalua Bay, Hawaii. After lender Lehman Brothers filed bankruptcy, they then withheld some $55 million the project was scheduled to receive in September and October. Thanks to a bridge loan from Maui Land and the timeshare/fractional project’s development partner Marriott International, construction was never interrupted.
While a bridge loan represents extra financing costs in the timeshare/fractional project’s development phase, it also prevents a construction shutdown, which always means extensive costs to remobilize equipment, staff, and crew. Robert Webber, Maui Land president and CEO told the Honolulu Advertiser that there were no construction delays because of the financing problem and that the Ritz Carlton is scheduled to open this summer.
At the time Lehman began to fall short, the new 146-unit Hawaii timeshare resort was 83 percent finished. The Honolulu Advertiser describes the Ritz-Carlton Club and Residences as, “84 traditional fee-simple condos, and 62 units being sold as “fractional ownership” condos – essentially a longer-term version of timeshare, in which each unit is shared by 12 buyers who receive three weeks of annual use.”
New Loan Structure and Timeshare Sales Keeps this Hawaii Timeshare Project Moving Forward
Without the depth of Lehman Brothers, the timeshare/fractional condos needed to restructure their deal, finding alternative money sources. A group of lenders who were already involved in the project, agreed to contribute more money toward the $120 million needed to complete the resort. Now, Lehman is providing $35 million, while Central Pacific Bank; Landesbank Baden-Wurttemberg; Deutsche Hypothekenbank; and Marriott are providing the remaining $85 million.
But here’s the part that may be the most interesting news of all: the amount needed to complete the project was reduced because 10 timeshare units sold last month!
Timeshare sales of new properties are taking place. And they are even occurring in Hawaii timeshares where there travel costs during this recessionary period have reportedly hurt Hawaii tourism. This is just one more sign of the economy and the timeshare industry weathering the storm and perhaps beginning to regain its footing. Presales of timeshare units to offset construction costs and reduce the original debt is one of the things that have made timeshare, fractional and condo hotel projects attractive to developers in the past, making this little bit of news especially meaningful to everyone in the timeshare industry.
Other Ritz-Carlton timeshare and fractional news:
