The Bratton Team

December 4, 2012

By NANEA KALANI – Staff Writers ( , The Maui News

The highest bid at a foreclosure auction Monday for dozens of luxury condominiums and hundreds of time-share interests at the financially troubled Ritz-Carlton Club and Residences at Kapalua Bay came through at $55 million.

The bid was made by Island Acquisitions Kapalua LLC – one of just two registered bidders for the auction, according to Honolulu attorney George Van Buren, the court-appointed commissioner in the foreclosure case brought by lenders on the Kapalua property.

Island Acquisitions Kapalua LLC was not listed as of Monday with the state’s Business Registration Division under the Department of Commerce and Consumer Affairs. Neither could business records be found in online databases for the states of California, Delaware and New York.

Van Buren said that the limited liability company is tied to a lending entity that purchased a portion of the original lenders’ interests.

Lehman Brothers had been the initial lender for the $370 million project, but, prior to filing for bankruptcy in 2008, Lehman reconfigured the loan, with Central Pacific Bank, Landesbank, Deutsche Hypo, Swedbank and a Marriott affiliate each taking an interest. Central Pacific Bank, Landesbank and Deutsche have since sold their interests.

A Honolulu attorney for Landesbank, the agent for the group of lenders, did not respond to requests for comment.

The $55 million bid still needs approval from a judge, Van Buren said.

Lenders for the project – led by German bank Landesbank Baden-Wurttemberg – foreclosed on the property in June in 1st Circuit Court on Oahu. Judge Bert Ayabe is handling the case.

Project developer Kapalua Bay LLC – a joint venture among affiliates of Maui Land & Pineapple Co., Exclusive Resorts and Marriott International – owes more than $304 million in principal and interest on the property, which opened in mid-2009.

The land and buildings have a combined assessed value of $284.4 million for tax purposes, according to a fact sheet for the auction.

Van Buren said there’s a possibility the sale could be reopened if another bid comes in at 150 percent of the current bid, or $82.5 million.

Monday’s auction included 56 residential condominiums, five commercial apartments and 567 fractional-ownership interests in 62 time-share units at the Ritz-Carlton Club and Residences. The sale also includes leasehold interest in The Shops at Kapalua.

Once a sale is finalized, it’s unclear if the property will remain under the luxury Ritz-Carlton brand. Ritz-Carlton in October extended for a second time its deadline to pull out as management company of the property amid the project’s financial woes. The company has pushed that date back to Dec. 31.

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