GlobeSt.com UPDATE: Judge Rejects Hotel Developer's Optimistic Occupancy Numbers

ORLANDO-Brazilian condo-hotel developer Sergio Naya is pitching but U.S. Bankruptcy Judge Karen S. Jennemann isn’t catching his line that the second unfinished 17-story, 204-suite building at Sandy Lake Towers in south Orlando could be at 65% occupancy by March if a $7 million construction loan is approved.

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.

The largest creditor is New York-based Arbor Commercial Mortgage, owed $16 million.