Hawaiian Resort Gets Funding, Other Projects Not So Lucky

Maui Land & Pineapple Co. scored big recently when it secured a new loan agreement through the United States Bankruptcy Court to fund the complete construction of its joint venture project, The Ritz-Carlton Club and Residences at Kapalua Bay, after its main investor filed bankruptcy. But other resort projects haven’t been as lucky. Last month, Revel Entertainment’s developers of the planned beachfront casino entertainment resort on 20 acres of land along the Atlantic City Boardwalk said they would suspend work on the interior of the project and lay off workers. “This modification to the construction timeline will allow the project to continue moving forward at a sustainable pace in spite of the challenges experienced in the current economic environment,” the company said. Additionally, Las Vegas is suffering a similar fate with Boyd Gaming Corp.’s Echelon project. Located on 87 acres on the Las Vegas Strip, the project was designed to feature approximately 5,000 hotel rooms, 750,000 square feet of convention and meetings space, two live entertainment venues, 30 dining and nightlife venues, and a 140,000-square-foot casino, all within a resort setting with a targeted opening in the third quarter 2010. On Aug. 1, Boyd Gaming released a statement that they “have decided to delay construction of our Echelon project on the Las Vegas Strip due to the difficult environment surrounding today’s capital markets and the challenging economic conditions that currently exist.” The statement added that Boyd expects to “resume construction when credit market conditions and the overall outlook for the economy improve. Due to the difficult environment in today’s capital markets, as well as weak economic conditions, we have decided to delay our Echelon project on the Las Vegas Strip. Our present expectation is to resume construction in three to four quarters, assuming credit market conditions and the economic outlook improves.” Boyd was partnering with Morgans Hotel Group and General Growth Properties (GGP). As of the June 30, Boyd Gaming said it had incurred approximately $500 million of capitalized costs related to the overall project. Despite the fact that the Ritz-Carlton Club and Residences at Kapalua Bay joint venture’s lead lender, Lehman Brothers Holdings Inc., discontinued its funding of the project after filing for bankruptcy in September, the project got good news on Jan. 28 when the United States Bankruptcy Court approved terms of a new loan agreement sufficient to fully fund completion of the development. Under the new agreement, Central Pacific Bank replaces Lehman as the administrative agent under the loan. Lehman has agreed to provide $35 million of the $120 million in completion financing, with other co-lenders, including Deutsche Hypothekenbank and Landesbank Baden-Wurttemberg and Marriott International, Inc., providing the balance. As a result of the new loan agreement, construction never ceased, according to a prepared statement. The Ritz-Carlton Club and Residences at Kapalua Bay offer 84 private ownership residences and 62 residences sold in deeded, one-twelfth fractional ownership interests, along with an abundance of amenities on a 24-acre oceanfront site and ocean views overlooking one of Maui’s beaches.