Goldman Sachs Requests Right to Foreclose on Bankruptcy Protected Sawgrass Resort

RQB Resort, LP filed for bankruptcy protection in March. They own Sawgrass Marriott Resort & Cabana Club in Ponte Vedra Beach, Florida, outside of Jacksonville. They also owe $196 million to the mortgage arm of Goldman Sachs on the Florida property.

Here’s the punch line … Goldman Sachs Mortgage Co. is asking the bankruptcy judge to allow them to foreclose on the property and possibly sell it, regardless of the bankruptcy. Goldman claims RQB’s debt of $196 million is more than the property is worth and that it has not demonstrated how it will meet its debt obligation.

Goldman acknowledges RQB has shown it can cover current operational expenses but not debt service. RQB has not paid Goldman Sachs since August 2009 according to the WSJ. Reuters reports that RQB Resort listed estimated assets and liabilities of up to $500 million according to court filings.

The Wall Street Journal reports Goldman’s position, "The debtors have thus failed to show that an effective reorganization is possible within any reasonable period of time."

The 65-acre Sawgrass Marriott Resort & Cabana Club claims the title as largest convention and resort property between Atlanta and Orlando. The property includes 508 hotel rooms, golf villas, restaurants, a spa and beach club on the Atlantic.

Most will be aware of the famous TPC Sawgrass which is the headquarters of the U.S. PGA Tour and site of the U.S. PGA Tour’s Tournament Players Championship. The prestigious tournament has a $9.5 million purse. The course is ranked ninth on Golf Digest’s list of America’s 100 Greatest Public Courses for 2009-2010 and ranked among the top 80 golf courses in the world by Golf Magazine. The bankruptcy filings does not include the TPC Sawgrass golf course properties.

The high-profile resort property was acquired at the height of the market with the downturn close on the heels of the closing. In court papers, RQB said that it had bought the resort in 2006 for $220.6 million and subsequently invested $30 million in upgrades. The company borrowed $193 million from Goldman with a current balance due of $196 million.

Another example of being the late to the party. Then there is Sea Island with troubles a little way up the coast. And probably some in between.