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An article in the Wall Street Journal this week highlights a developing battle for ownership of four giant U.S. luxury resorts. Singapore’s sovereign-wealth fund, a creditor in the bankruptcy case involving the four resorts, is forcing an auction of the properties by year-end — against the wishes of the current owners: a group led by Paulson & Co. and Winthrop Realty Trust, a Boston-based REIT.

The four properties are the Grand Wailea Resort Hotel & Spa in Wailea, Hawaii; the  La Quinta Resort & Club PGA West in La Quinta, California; the Arizona Biltmore Resort & Spa in Phoenix; and the Claremont Resort & Spa in Berkeley, California.

Paulson and Winthrop took control of the four properties (along with the Doral Golf Resort & Spa in Miami, which was later sold to Donald Trump) in early 2011, after then-owner Morgan Stanley failed to refinance the $1.5 billion in maturing debt on the properties because of a decline in value and cash flow from the resorts amid the recession.

Shortly thereafter, Paulson commenced bankruptcy proceedings to shield the properties from creditors while it worked to sell assets and pay down the debt. Around that time, Paulson entered into a standstill agreement with lenders led by the Singapore sovereign wealth fund, known as GIC, pursuant to which it pledged to refinance the debt and pay off the lenders by September 1 of this year.

GIC now alleges that the owners missed an August 1 interest payment, which triggers an auction of the properties by year-end.  As a lender with close to $400 million in mezzanine debt, GIC is likely to bid aggressively at the auction, according to the Journal article.

Paulson is looking to hold on to the properties and has been working with Five Mile Capital Partners to find new partners to contribute a total of approximately $400 million in equity, along with debt, to pay off the existing creditors, according to the article in the Journal.

Read the full Wall Street Journal article here (subscription required).