Banyan Cay Resort & Golf in West Palm Beach, Florida could see a new dawn.
The federal bankruptcy judge approved the bid of $102.1 million by Westside Property Investment Co. Inc. for the hotel complex that has been delayed. The sale should close on 25 July.
Joseph Pack, a Banyan Cay attorney, stated that the property would have sold for much more money if it weren’t for the rising interest rates which scared off other bidders as well as their bank lenders.
Pack stated that the construction of the hotel and resort, which is still unfinished, could be completed within the next year.
Banyan Cay: the story of a resort that took years to build
Banyan Cay filed Chapter 11 bankruptcy in April, the latest twist to the unfinished hotel that has been under construction for years.
The outdoor pool deck, for example, still needs to be finished.
Pack said that the sale was a good thing for the local community. We understand that Westside is eager to finish the project immediately as planned. “The neighbors should be thrilled.”
Residents of the Lands of the President, which is located adjacent to the hotel and overlooks it, are now in a state of uncertainty because of the hotel’s troubles. The foreclosure also caused a problem for the residents of a new, single-family neighborhood, Residences at Banyan Cay by SobelCo, which is adjacent. The homebuyers should have been able to access the hotel club with their purchase.
Adams Weaver, his wife Bonnie and their Banyan Cay property was purchased in August of 2019. The community has grown in value as a result of the Pandemic.
The Weavers have been living in the Residences at Banyan Cay for four years, but the resort is still not finished. Weaver stated, “We would love to be able to access the club.”
No one from the Westside could be reached to comment.
Banyan Cay Resort is under construction in West Palm Beach on June 7, 2022. (Meghan McCarthy/Palm Beach Post/USA Today Network)
Banyan Cay Resort Complex is located on the former Country Club property
Banyan Cay, a $100 million complex, is located just east of Interstate 95 on Congress Avenue, north of Palm Beach Lakes Boulevard and near Palm Beach Outlets.
Investors have been trying to redevelop the property for more than a decade.
In 2011, an investor group bought the 250-acre Banyan Cay land for $11,000,000. The property was previously the President Country Club. It had financial problems and sold it to an investor. The investor group sold the property in 2015 to Banyan Cay Dev LLC led by Domenic Gatto Jr. for $26 millions.
After years of construction delays, a change in hotel brands, and legal troubles for Gatto, the Banyan Cay Resort is scheduled to be finished in 2022.
The Banyan Cay Complex was to be completed by 2018
Banyan Cay was originally slated to include a boutique hotel managed by Noble House Hotels & Resorts and a Jack Nicklaus-designed golf course. The hotel was to be opened by fall 2018.
The Jack Nicklaus Signature Golf Course, a 130-acre 18-hole course, was completed in 2017. It is a popular venue for charity tournaments, as well as qualifiers for PGA sanctioned events.
The construction of the hotel was delayed. The hotel construction finally began in 2019, but then stopped.
The project’s lender, Banyan Cay, filed a lawsuit in 2022 as the company hoped to finish construction and open the hotel by the fall. U.S. Real Estate Credit Holdings III A L.P. filed a complaint in Palm Beach County Circuit Court on July 16, alleging that Banyan Cay had missed the April 30 deadline to open its hotel.
Calmwater Capital sought repayment for two other loans. The first was a construction loan of $61 million to build the Banyan Hotel. Another loan of $24 million was given for the construction of almost two dozen villas that were not yet built on the property.
In February, Banyan Cay lost the case, and two final judgments were issued in Calmwater Capital’s favor by a Palm Beach County Circuit Court Judge. The total judgments were more than $95,000,000, which includes interest and loans.
Banyan Cay owner filed Chapter 11 to stop the foreclosure and lock in a buyer.
The Destination by Hyatt boutique brand was to debut in Florida at the 150-room resort and hotel. This would be the first Florida location for this upscale, boutique Hyatt. It’s not clear if Banyan Cay, which is about to be sold, will still remain a Hyatt property. A Hyatt spokesperson said that she did not have any updates on the site.
It’s not surprising that Westside is listed in the bankruptcy.
Documents filed previously in the case indicated that Westside set the minimum price for an auction. However, another bidder would be able to buy the property at the auction if it rose at least $5,000,000 more than Westside.
According to bankruptcy court documents filed by the marketing company, 249 prospect group members signed a nondisclosure contract to evaluate the property. 16 of these groups participated in property tours.
Pack stated, “We fully anticipated a robust auction and had indications that we would right up to the deadline of June 8, which was the deadline.”
Pack confirmed that no other bidders made an offer for the site. The cost of financing became prohibitive for potential bidders as interest rates rose.
Pack said that since the beginning of the year “the capital market has shifted in an important way. This is unfortunate because it was not about the demand for the assets. The banks wouldn’t have underwritten (a sale) if interest rates rose.
The homebuilder Schickendanz Inc. will purchase the Banyan Cay single-family land in addition to hotel property.
Pack explained that the only potential hiccup to the sale process of the hotel or homes would be if the creditors disagreed on how the $112.6million sales proceeds should be divided up once the project’s financier is paid.
Weaver acknowledged that the project is still in flux, but expressed his hope for a quick completion. He said that if it happens, “we will have a party for Christmas.”
Alexandra Clough writes business columns for the Palm Beach Post. You can contact her at [email protected]. Twitter: @acloughpbp. Help support our journalism. Subscribe to our journalism today.
