Sheraton Keauhou Bay eyed for foreclosure amid Lehman Brothers woes

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Lenders of the Sheraton Keauhou Bay Resort & Spa are considering foreclosing on the 521-room luxury property on the Big Island's Kona Coast.

Lehman Brothers Holdings Inc., which filed for bankruptcy last year, is the main lender on the property, owned by New York private-equity firm Brickman, whose Hawaii entity is Koa Hotel LLC.

Like the rest of the island's hotel industry, the 22-acre resort south of Kailua-Kona has seen occupancy drop. The Big Island's occupancy rate has hovered around 50% since September.

The resort has between 250 and 300 employees.

Brickman acquired the property in June 2001, which includes 65,000 square feet of meeting space, a 14,000-square-foot pool, 12,800 square feet of retail space, a wedding chapel, a fitness center and spa.

Starwood Hotels & Resorts Worldwide Inc. opened the resort in 2005 after a two-year, $70 million renovation. Total value of the resort is $43.8 million, according to county tax records.

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