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04/25/09
Wigwam faces foreclosure sale as Starwood deal ends
Filed under: General, Real Estate
Posted by: Lillian Wong @ 4:10 pm

The venerable Wigwam Golf Resort & Spa in Litchfield Park is scheduled to be sold at public auction July 9 after owners defaulted on a $65 million loan.

Also included in the foreclosure action are the two golf courses at the Biltmore Golf Club.

Kabuto Arizona Properties LLC owns the properties in foreclosure and had provided them as collateral for the loan it received from Citigroup Global Markets Realty in June 2007.

But that is not all of the bad news for the historic west side resort. Starwood Hotels & Resorts Worldwide Inc., which operates the property, notified owners, employees and the city of Litchfield Park April 20 that it will not renew its contract effective May 29. At that time, 330 employees will be laid off. Starwood has managed the Wigwam since 2001.

“It’s a surprise. I knew there were financial problems, but when I heard that Starwood had a meeting yesterday with their employees, I knew it was something big,” said Darryl Crossman, Litchfield Park’s city manager.

He in turn called Starwood, which he said confirmed that the international hospitality firm no longer will maintain the Wigwam as part of its Luxury Collection of hotels.

The decision was made in the last two days, according to K.C. Kavanagh, Starwood’s vice president of public relations. “This is separate and totally unrelated to the foreclosure,” Kavanagh said.

Starwood and Kabuto, she said, “have spent many months negotiating and there were several material points of difference. Given that, we decided to terminate our relationship.” Kavanagh would not elaborate what the differences entailed.

According to a letter sent Monday to Crossman by Ronnie Collins, acting general manager of the Wigwam: “Starwood and the owner of the hotel had been working toward trying to resolve a dispute concerning their management agreement and Starwood’s ability to continue to operate the hotel. Unfortunately, it is now clear to Starwood that this dispute cannot be resolved in a way that would enable Starwood to continue to manage the hotel.”

Crossman said closure of the Wigwam would cause serious distress to Litchfield Park, a community of 4,500 residents located in the vicinity of West Camelback and North Litchfield Road. The Wigwam, built by the Goodyear Tire & Rubber Co. in 1929 for its executives, has been the backbone of the community.

“It not only is an historic property for the whole Valley and it’s not only the heart of this community, it’s also our financial lifeline,” Crossman said.

The Phoenix Business Journal was unable to contact Kabuto Arizona Properties President George Lee, a resident of Litchfield Park.

Crossman said Lee’s wife is giving birth to a child. Though Crossman said he talked with Lee recently, they haven’t been in touch for several days.

“I’ll probably call him by the end of the week. Right now we’re trying to find out what the city can do, how we might be able to facilitate some other arrangements,” Crossman said.

Even so, Kabuto Arizona Properties is facing the foreclosure sale of the Wigwam resort and golf course and the Biltmore’s Adobe and Links golf courses.

According to documents filed with the Maricopa County Recorder’s office, Kabuto failed to make monthly payments on the $65 million loan beginning in November.

It is unclear what impact the foreclosure will have on Biltmore Golf Club, a popular spot with local golfers. A spokesperson for the adjacent Arizona Biltmore Resort and Spa, which is owned by a different company, referred questions about the foreclosure to the golf club’s General Manager Dick Bates. He did not respond prior to press time.

Phoenix Business Journal - by Jan Buchholz - Tuesday, April 21, 2009, 5:12pm MST  |  Modified: Wednesday, April 22, 2009, 12:54pm


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