The economic recession has not discriminated in choosing its victims. From private homeowners to large corporations — people and businesses from all walks have fallen victim to the recession.
This week owners of the Sawgrass Marriott Resort in Ponte Vedra fell victim to economic times, filing for Chapter 11 bankruptcy protection Monday in US Bankruptcy Court in Jacksonville
The owners, RQB Resort LP, in court documents filed Monday, listed debt in excess of $200 million.
In 2006 RQB Resort LP purchased the 65 acre resort for approximately $222.5 million with financing coming from Goldman Sachs Commercial Mortgage LP. After purchase, RQB invested $30 million in service upgrades and capital improvements and subsequently experienced a 10 percent growth in both revenue and occupancy rates during their first full year of ownership.
Court documents indicate that the economic recession played a major role in Monday’s filing.
"The current economic recession and associated disruption in the debt and equity capital markets have been extremely challenging for the debtors," RQB said in court filings. "The current economic conditions have caused a significant downturn in business and consumer spending, including destination business conferences, which has adversely impacted the debtors operations. "
RQB said that convention business historically makes up approximately 65 percent of their annual revenue but that convention business has decreased dramatically during the economic downturn.
"Corporations have scaled back in booking corporate and group outings at resorts such as the resort, and those that continue to book do so with significantly reduced budgets," RQB said in court filings. "This has resulted in a significant reduction in the number of large corporate and group events that have come to the resort, depriving the debtors of a significant source of operating revenues."
In the third quarter of 2008 the owners began a restructuring plan that reduced costs by $4.5 million but still saw revenue fall by more than 25 percent in 2009.
Goldman which is owed in excess of $192 million met with RQB last March and began the process of attempting to restructure their loan. Last October Goldman informed RQB that it instead intended to foreclose on the resort and that restructuring the loan was no longer an alternative.
RQB then hired a New York real estate investment bank to secure equity capital to provide Goldman with a reduction in principal as part of a debt restructuring but on Dec. 14 of last year Goldman issued an acceleration notice and filed a foreclosure complaint causing the Resort to seek Chapter 11 Bankruptcy Protection.
Jeff Mayers, general manager of Sawgrass Marriott Golf Resort & Spa said that the bankruptcy proceedings will have no effect on the day to day operations at the resort.
"This action is in response to the current global economic environment and the fact that an agreement on a restructure with the lenders could not be reached. This process will protect the Resort and allow us to continue to operate business as usual," said Mayers. "Providing our guests and members with the finest resort-style getaway experience and the highest standards of quality and service they have come to expect is our first priority. We are firmly committed to maintaining our world-class operation and foresee no changes in the day-to-day operations at Sawgrass Marriott Golf Resort & Spa."
The Resort plans no changes to employee status, and will continue normal operations which will require a full staff of employees. They are current with all vendors and suppliers.
shanegriffis@pontevedrarecorder.com
(904)285-8831 ext. 31
