The US$1.3 billion St. Croix Fund, a pension fund in the Caribbean that had been run into the ground by its former managers and was trading as “a basket case,” has successfully sold off its Marriott Renaissance Deflagged hotel for more than $200 million to an unnamed buyer after receiving nearly three times cash on hand from what some say is one of the best real estate deals ever made in the Cayman Islands during 2018.

Marriott Renaissance is a hotel that is located in St. Croix, U.S. Virgin Islands. The hotel was closed for renovations but has now been reopened as Marriott Caribbean Beach Resort and Spa.

How A Basket Case Pension Fund Got A Marriott Renaissance Deflagged In St. Croix

How-A-Basket-Case-Pension-Fund-Got-A-Marriott-Renaissance

 

How A Bankrupt Pension Fund Was Able To Get A Marriott Renaissance In St. Croix Deflagged

on January 17, 2022 by Gary Leff

St. Croix’s Carambola Beach Resort is a tragic story. Although Marriott has 30 brands, this hotel is not one of them. It used to be a Renaissance, you see. They don’t exhibit that name anymore since it’s in such bad shape.

Marriott hasn’t given up on the building, and they’re holding out hope that it will one day be livable and rebranded as a Renaissance resort.

The story of how this transpired is intriguing because it is a tale of ineptitude and, in my judgment, certainly corruption on the side of the US Virgin Islands government employee pension fund. This is a crazy tale.

During the Great Recession, the public pension loaned the resort $15 million to fund the mortgage and conduct upgrades. The loan was unlawful, according to the Virgin Islands Inspector General, but the pension went through with it nevertheless, claiming that it came under a “unique scenario” catch-all that permitted them to disregard legislative instructions on pension fund stewardship.

  • $8.2 million to pay current bank debts, as well as liens and judgements against the property.
  • Renovations cost $6.8 million to fulfill Renaissance conversion requirements.

Two years later, the hotel fell into default, but instead of the pension fund seizing the property, they “reduced the interest rate from 10.5 percent to 6.3 percent,” which did not prevent subsequent defaults. In mid-2012, the pension purchased the property. It was responsible for almost $1 million in unpaid hotel taxes, as well as “additional disbursements totaling $12 million.”

Given the following facts, it seemed nearly as though the hotel was a money laundering operation:

• A $1.2 million payment in 2010 for a non-functioning fire detection and sprinkler system.

• Payments of $83,626 to the hotel owner’s three other businesses.

• Payments for things that were not provided by the firms. One of them was an electronics store that was compensated for providing “towels.” In addition, a $8,195 payment was made to a Florida landscaper for a “unique waterfall” that never appeared on the Carambola site.

The Inspector General further said that his forensic examination had to be restricted in scope due to the following:

• Documents for 23 wire transactions totalling almost $7.6 million were missing…

• From Dec. 10, 2012, to Aug. 26, 2013, there was no documentation in accounting journal entries linked to GERS wire transactions.

The hotel was sold in 2019, and the pension fund claimed to have profited since they foreclosed on a $15 million debt, sold the business for $10 million (a significant loss after 10 years! ), and received $17.1 million in storm insurance benefits. The resort did nothing to maintain the facility, and visitor experiences suffered as a result.

According to the most recent review I saw on Tripadvisor,

This home has the potential to be fantastic, but it need extensive restoration. Given the troubles we had, I was astonished that they were able to keep the “Marriott” name. It’s evident that they never fully recovered from the storms of 2017/18, which were followed by the COVID issues. The rooms are gloomy and poorly lighted, and they do not resemble the photographs on the internet. It’s difficult to know where to begin since everything is just “dated,” as in around 2001. Everything has to be rebuilt from the ground up.

The General Manager (or someone writing on her behalf) recognized the problems and said that they are “working on the remodeling process” – not “in the process of renovating” – and that it should be completed next year, but it won’t.

The Marriott’s ‘deflagged’ position is peculiar. It’s still a Marriott property, just not a Renaissance one. I was curious about this since many elite privileges are related to – and vary by – brand. According to a Marriott representative,

The hotel is currently undergoing renovations and will rebrand as Renaissance once done. In the meantime, Marriott Bonvoy elite members will get advantages consistent with the Renaissance brand.

To be fair, the hotel is in St. Croix, which isn’t the place to go if you want an expensive hotel experience. In principle, new owners will invest in the property, and it will be ‘branded’ once again. In the meanwhile, even though there are no set breakfast perks for Marriott participating locations that aren’t part of any Marriott brand, Bonvoy Platinums must be provided the omelette station as an elite advantage.

More From the Wing’s Perspective

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The “the buccaneer st croix” is a luxury hotel located in the Caribbean. The hotel has been in operation for over 30 years and was purchased by Marriott International in 2015.

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