A partnership led by Kennedy Wilson has acquired The Ritz-Carlton, Lake Tahoe and The Ritz-Carlton Residences, Lake Tahoe from the property’s lenders, which had foreclosed on the asset last year. Although the Beverly Hills-based real estate investment firm declined to disclose the purchase price, the partnership paid a total of $73.6 million for the property, according to the Recorder's Office for Placer County, where the property is located.
Under the terms of the transaction, Kennedy Wilson has invested $18 million of equity for a 50 percent ownership interest, with an unidentified institutional investor putting in an undetermined amount of equity for the remaining 50 percent stake. In addition, the partnership is financing the acquisition with a $45 million loan provided by Pacific Western Bank.
Built in 2009, the resort includes The Ritz-Carlton, Lake Tahoe and The Ritz-Carlton Residences. The hotel portion includes 170 guest rooms, while the residential component encompasses the entire top floor of the hotel, as well as a private wing on the third floor that includes 23 penthouse residences. The resort, which features ski-in, ski-out access in winter and concierge services for golf, mountain biking and hiking in the summer, also includes a 17,000-square-foot spa and a signature restaurant.
The property’s woes culminated in March 2010, after a lending group led by Bank of America filed a notice of default against the developer, East West Resort Development of Avon, Colorado. At the time, East West reportedly was behind on almost $19 million in payments for loans totaling about $157 million, according to local news reports.
Later in 2010, East West filed for Chapter 11 bankruptcy protection after its real estate sales reportedly dropped by 60 percent. The developer’s problems caused the Ritz-Carlton to be placed into a court-ordered receivership, which ended in August 2011 when the lenders foreclosed on the property.
“The Ritz-Carlton, Lake Tahoe is the premier mountain resort west of the Rockies, and we are pleased to be able to acquire the property at a significant discount to replacement cost,” said Stuart Cramer, president of Kennedy Wilson’s residential investment group. “Along with the recent increase in investment and upgrading of other properties in the area, the Ritz-Carlton now establishes Lake Tahoe as a true world-class destination.”
Looking forward, Kennedy Wilson will begin marketing the 23 units at The Ritz-Carlton Residences in January.