CLEARWATER — One year after a palatial new Hyatt Regency resort debuted as an emblem of Clearwater Beach's rebirth, its developers are facing foreclosure on their $141 million mortgage.
A centerpiece of the city's $30 million BeachWalk promenade, the 17-story Hyatt Regency Clearwater Beach Resort and Spa has become a hit among vacationers aiming for one of the resort's 250 condo-hotel suites on the Gulf of Mexico waterfront.
But many prospective buyers of the condo-hotel rooms, furious over construction delays, have sued to void their contracts. Of the resort's 250 condo-hotel rooms, only eight have sold.
Dougherty Funding, the resort's lead lender, began the foreclosure process last month in Pinellas-Pasco Circuit Court. A mortgage from the Delaware firm paid for most of the resort's development, including $110 million in construction.
The resort's owner is Crystal Beach Capital, an affiliate of NJR Development. NJR president Neil Rauenhorst said the foreclosure is one step toward a deep restructuring aimed at quashing the buyer lawsuits and liens. Rauenhorst said the lenders want Crystal Beach Capital to remain at the helm of the resort.
"We have a lot of contract buyers who are unable or unwilling to close," Rauenhorst said. "To clean all that up, our lender sees that a foreclosure action will achieve that."
Messages left for Dougherty's attorneys, Scott Underwood and John Emmanuel, and Hyatt's general manager, Brian Kramer, were not returned.
The hotel rooms, ranging from $285 to $885 a night, will remain available during the foreclosure, bringing in crucial revenue that neither the developers nor lenders want to stop.
Within three months, Rauenhorst said, the 1-million-square-foot resort will relaunch a campaign to sell the hundreds of remaining condo-hotel rooms. Owners can stay for up to 60 days a year and earn a cut of the suite's rental rate while they're away.
By last year, prospective buyers had signed sales agreements for a fifth of the 250 suites, at costs between $470,000 and $1.25 million. As the condo market crumbled, dozens of buyers, including City Council member Paul Gibson, backed out.
The resort's creme de la creme, 18 Dominica condos managed separately from the rental rooms, remain unsold. The developers are waiting for the market to strengthen, Rauenhorst said, before listing those condos for sale. Early pricing ranges from $2 million for a large condo with waterfront terrace, to $5.5 million for one of the two penthouses, each with six bedrooms and 61/2 bathrooms, filling much of the seventh floor.
The Gulfview Boulevard resort's money woes came as little surprise to council member John Doran, who called it "the biggest example close to home" of a deflated condo economy.
"They finished the project. They opened the doors. They welcomed tourists to this place," Doran said. "Unfortunately, there was that other side to it, the condo side of it, where they couldn't push past the goal line."
Times researcher Carolyn Edds contributed to this report. Contact Drew Harwell at (727) 445-4170 or [email protected]