Fortress to Sell Caribbean Hotels in $465 Million Muni-Bond Deal
Fortress Investment Group plans to sell two resorts on St. Thomas in the US Virgin Islands through a deal that will be financed by municipal bonds, and which will allow the territory to ultimately acquire the property.
The investment firm is selling Frenchman’s Reef — which includes a 392-room Westin and a 94-room boutique hotel — to an affiliate of the Community Finance Corp., an Arizona nonprofit. CFC will acquire the property using proceeds from a roughly $465 million muni sale scheduled for next month through the Virgin Islands Hotel Development Financing Corp. The offering also includes a $15 million private placement.
Fortress will receive about $360 million of the proceeds, with the rest of the funds from the mostly tax-exempt, unrated offering targeted for reserves and fees.
When the debt is repaid, USVI will become the owner of Frenchman’s Reef — among the territory’s biggest private employers. The securities are due to mature in 2055. Davidson Hospitality Group manages the hotels.
By Martin Z Braun