Ownership of Morgan Stanley Real Estate Fund V Resorts at Stake

Investors jockeying to control the fate of eight huge U.S. resorts are pushing to get the Feb. 1 due date of $1.5 billion of debt on those properties extended.

At stake is ownership of the CNL Hotels & Resorts Inc. portfolio, including Hawaii's 780-room Grand Wailea resort and the 739-room Arizona Biltmore resort in Phoenix.

The CNL resorts are owned by Morgan Stanley Real Estate Fund V, which financed its 2007 purchase of the portfolio by saddling the properties with $3.3 billion of debt. The restructuring of that debt will likely be one of the largest in the commercial-real-estate market this year.

The latest twist in the CNL saga came earlier this month, when investors led by Paulson & Co. and Winthrop Realty Trust reached an agreement with the Morgan Stanley fund to take control of CNL, exchanging their $600 million of CNL's corporate mezzanine debt for the company's equity, according to court documents and people familiar with the matter.

Read More: