Dell family office hotel loan handed over to special servicers

A $250m loan on the Four Seasons Resort Maui has transferred to CWCapital after MSD Capital defaulted on its repayments. Another $175m loan against the property is also believed to have been transferred.

A $250 million loan secured against the Four Seasons Resort Maui has been transferred to special servicers after the family office of Dell founder Michael Dell defaulted on its interest payments.

Yesterday, Fitch Ratings confirmed the securitised loan had been transferred to CWCapital following monetary default. A further $175 million loan also secured against the 380-room hotel is also believed to have been transferred to CWCapital.

MSD Capital, the Dell family office, said the firm was in talks with holders of the mortgage loans about restructuring the debt to “recognise the challenges of the current operating environment”.

The firm acquired the hotel in 2004 for $280 million and refinanced the first mortgage for $425 million in 2006 – split into a $250 million loan and a $175 million loan. Reuters cited credit-rating company Realpoint as saying net cash flow at the Four Seasons Maui – located in Wailea, Hawaii – was about $33 million in 2007, and just $10.9 million the first three quarters of 2009.

MSD stressed that hotel operations were “unaffected by our decision to not make the recent interest payment”. CWCapital declined to comment.

In 2006 and 2007, MSD partnered with private equity real estate firm Rockpoint Group to acquire two other resort hotels in Hawaii, according to real estate data provider Real Capital Analytics. The two firms bought the 243-room Four Season Resort at Kailua Kona for an estimated $509 million in March 2006 and the 125-room Kona Village Resort, also in Kailua Kona, in March 2007 for an undisclosed sum.