Government of Singapore Investment Corp bids $1.5 billion for U.S. bankrupt luxury hotels
The Government of Singapore Investment Corp has bid $1.5 billion for a group of bankrupt hotels owned by hedge fund Paulson & Co, including the Arizona Biltmore Resort & Spa in Phoenix and La Quinta Resort & Club in La Quinta, California.
The MSR Resort hotel group, which also includes Grand Wailea Resorts Hotel & Spa in Hawaii and the Claremont Resort & Spa in Berkeley, California, said it had chosen GIC as the ‘stalking horse’ or low bidder for the hotels, after looking for an initial bidder since May. It said it had also spoken with possible equity investors for a reorganization of the hotels before deciding on the GIC offer.
GIC is a sovereign wealth fund that manages Singapore’s foreign reserves and is a large real estate investor in the United States. It is a lender to the hotel group and had already made an offer for the group shortly after the bankruptcy filing. It offered $1.5 billion in cash and debt but the resort group rebuffed it, saying it would try to do better for creditors.
Paulson bought the hotels from Morgan Stanley in 2011 and put them into bankruptcy a month later, saying it planned to reorganize them. It already sold one of the hotels, the Doral Golf Resort & Spa in Miami, Florida, to Donald Trump.
Morgan Stanley Real Estate, part of Morgan Stanley, had purchased the five hotels and three others in 2007 for about $4 billion. The hotels filed with $2.2 billion in assets and $1.9 billion in debt. The $1.5 billion includes up to $1.12 billion in cash and paying off up to $360 million in debt-related claims, according to court documents.
The fund has arranged for a $28 million break-up fee if the hotel group selects another bidder during a bankruptcy auction that it hopes to hold on Oct. 25. A hearing in which the judge will consider the stalking horse bid and sales process is scheduled for Sept. 10.