Ritz-Carlton Lake Tahoe sold for millions below original cost

12/19/2012 12:00 AM

12/18/2012 10:11 PM

A Southern California real estate investment firm has purchased the Ritz-Carlton hotel at Lake Tahoe from a group of lenders at a steep discount from its original cost.

Kennedy Wilson also acquired the 23 ownership units that occupy a private wing of the luxury hotel, located on the slopes of the Northstar ski resort. These will be offered for sale in January, the company said.

According to the Placer County Recorder's Office, a partnership led by Kennedy Wilson paid a total of $73.6 million for the properties.

Kennedy Wilson declined to discuss the purchase price, but said it borrowed $45 million from Pacific Western Bank and invested $18 million in equity for a 50 percent stake. Spokeswoman Christina Cha said the rest of the property will be owned by an investment partner, whose identity she would not disclose.

A group of lenders led by Bank of America repossessed the Ritz last year after developer East West Resort Development of Avon, Colo., defaulted on a $165 million loan.

The hotel opened in 2009 to great fanfare, quickly falling victim to the recession. Despite what Ritz officials described as strong occupancy, East West couldn't keep up with its debt payments.

The Ritz purchase marks Kennedy Wilson's first foray into the Tahoe resort market, Cha said. Based in Beverly Hills, Kennedy Wilson started out in 1977 as a property auction house and has grown into an international real estate investment and services company traded on the New York Stock Exchange.

Since 2010, the company said, the firm and its institutional partners have acquired about $7.1 billion of real estate and related debt, with a focus on multi-family and commercial properties.

"The Ritz-Carlton, Lake Tahoe is the premier highlands resort west of the Rockies and we are pleased to be able to acquire the property at a significant discount to replacement cost," Stuart Cramer, president of Kennedy Wilson's Residential Investment Group, said in a statement.

The Ritz is the latest of several resort properties to change hands recently in Tahoe. In the past two years, for instance, Colorado giant Vail Resorts took control of both Kirkwood and Northstar.

"We've had a pretty good little flurry of major activity," said Carl Ribaudo, a Lake Tahoe resort consultant. "I think what you're seeing is everyone always has a sharp eye out for value."

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