Bank of America gets Kona Hotel on the Big Island of Hawaii)
August 3, 2009
KAILUA-KONA (AP) - The Sheraton Keauhou Bay Resort and Spa on the Big Island has been sold to Bank of America Corp. after the resort's owner defaulted on its mortgage with the giant lender.
The bank's winning bid was $8 million. Koa Hotel LLC defaulted last year with about $60 million remaining unpaid on its loan.
The default on payments for the 521-room resort is being blamed on the global recession's effect on Hawaii's struggling tourism industry.
Bank of America was the only bidder Friday.
Kenneth Marcus, a commissioner handling the auction for 3rd Circuit Court Judge Ronald Ibarra, said he does not expect the bank to make any major or immediate changes to the hotel.
''I'm fairly confident they will keep it open for the foreseeable future,'' Marcus said.
Bank of America's bid could be challenged by a higher bidder during a court hearing within the next 20 days, Marcus said.
''(Ibarra) can reopen it or not at his discretion,'' Marcus said. Only after the judge approves the bid will the sale be final, he said.
Koa Hotel is owned by the New York private equity firm Brickman Associates.
The firm bought the former Kona Surf Hotel in 2001. The company took out an $82 million mortgage in 2005 from Lehman Brothers Holdings Inc., which filed for bankruptcy last year. After mergers, the foreclosure was handled by Bank of America.
The firm had been current in property taxes and lease payments.
The hotel is on an oceanfront lot but lacks a beach. Real estate specialists say that limited its appeal
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