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ITT Sheraton Buys Luxury Resort Built by Charles Keating : Hotels: The infamous facility remains a garish monument to the S&L debacle.

March 12, 1994|DAVID W. MYERS | TIMES STAFF WRITER

ITT Sheraton Corp. said Friday that it has purchased the infamous Phoenician Golf & Tennis Resort, a 580-room luxury hotel in Arizona that was built by Charles H. Keating Jr. for nearly $300 million a decade ago and now stands as a garish monument to the nation's savings and loan debacle.

The Boston-based lodging giant would not disclose the sales price, but said the purchase also included the 344-room Crescent Hotel in Phoenix as well as 63 acres that surround the Phoenician in Scottsdale. A source familiar with the deal said Sheraton paid about $250 million in all.

Sheraton bought the hotels and land from the Kuwaiti government, which acquired a 45% stake in the property from Keating for $170 million in the 1980s and then bought the remaining 55% after federal regulators seized Keating's failed Lincoln Savings & Loan of Irvine.

"Both hotels are excellent properties and were obviously good investment opportunities," said Dolores Sanchez, a Sheraton spokeswoman.

Keating and his Lincoln Savings began building the Phoenician about 10 years ago. Geared toward affluent travelers, it boasted a $25-million art collection, seven pools, acres of marble flooring and two presidential suites that could be rented for nearly $4,000 a night.

But the Phoenician's excesses--coupled with frequent revisions to its design, many of which were ordered by Keating--led to cost overruns that seemed to doom the hotel from the moment it opened in 1988.

Federal regulators seized Lincoln in April, 1989, and took control of the Phoenician and Crescent hotels later that year. The Kuwaitis purchased the remaining interest from the U.S. government for $111.5 million in 1991.

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