Chicago-based Z Capital is set to take over Canyon Ranch for an undisclosed sum, according to bankruptcy court documents reviewed by PEI today.
Canyon Ranch is a hotel property located in Miami, Florida that was put into Chapter 11 bankruptcy in June by Lehman Brothers Holdings to ease the sale. At that time it was unknown who the potential buyer was. Z Capital also owns other hotel properties including the Enchantment Resort in Sedona, Arizona.
Z Capital declined to comment on the transaction.
Canyon Ranch was under construction in 2009 when Lehman took control as part of a foreclosure proceeding, but the project has not generated enough money to cover the loan.
Lehman Brothers affiliates FL 6801 Spirits LLC, FL 6801 Collins North LLC, FL 6801 Collins South LLC and FL 6801 Collins Central LLC were all of the parties included in the bankruptcy filing. Albert Togut is the lawyer for the debtors, which claimed assets of $12 million and liabilities of $17.3 million. The largest claims came from the hotel condo associations and hotel manager Canyon Ranch.
Sources familiar with the transaction say that Z Capital is keeping its options open in terms of what it will do with the property. The hotel has operated at a loss every year since opening.
According to court documents, the second highest bidder was North Beach Development.
Z Capital most recently closed its second special situations fund on $750 million in July, PEI reported at the time. The fund beat its $500 million target and will look for long term control investments in middle-market companies that may require growth capital, turnaround or restructuring.