The judge finds the occupancy projection unrealistic since the average occupancy among Orlando's 110,000 hotel and motel rooms in October, the last audited month, is 68%, according to Smith Travel Research of Hendersonville, TN. Sandy Lake Towers No. 1, completed in October 1999, is at 15% occupancy, up from 11.5% occupancy in October.

The court is not only denying the loan deal Naya's Orlando firm, Sandy Lake Properties, wants to make with Dallas-based Cypress Lending Group Ltd., but may order the 17-story, 204-unit Tower No. 1 be shut down permanently and the property sold at auction. Judge Jennemann will make that decision at a Dec. 20 hearing.

Sand Lake Towers Inc. filed for Chapter 11 protection under the U.S. Bankruptcy Code in August of this year, listing assets of $19,000 and liabilities of $20 million. The developer says the venture is losing $100,000 a month. The second tower has been under construction since 1991.