The developer of a $2 billion residential development in the Phoenix area locked down more than $30 million in financing as it navigates Chapter 11 bankruptcy protection.
The U.S. Bankruptcy Court for the Southern District of Texas approved up to $32 million of debtor-in-possession financing for Scottsdale-based Five Star Development, the Phoenix Business Journal reported. Texas-based BH Capital Ventures LLC provided the financing.
The money will go toward the construction of the $2 billion Ritz-Carlton Paradise Valley, The Palmeraie luxury residential and hotel development. Up to $24.6 million in cash collateral for villa construction is part of the loan to Five Star. The developer has been working on the Ritz-Carlton project since 2007. Plans for the 122-acre master-planned community include a 215-key Ritz-Carlton resort, 80 Ritz-Carlton branded villas, 32 homes and a 29-acre luxury retail and restaurant district, The Real Deal previously reported.
Now armed with debtor-in-possession financing and cash collateral, Five Star is preparing to begin a proper fundraising effort to restart and complete the Ritz-Carlton project.
The money “supports ongoing operations and advances the restructuring process,” thus “positioning the company to pursue a confirmable plan of reorganization and secure the capital required to fully restart hotel construction,” a Five Star Development spokesperson told the Business Journal. “Discussions regarding dedicated hotel financing are ongoing.” The goal with the fundraising is to “secure the capital necessary to address secured lender claims and support a full hotel restart.”
Five Star Development and lender Madison Realty Capital have been involved in a legal battle over financing for the construction project over the past two years. Last fall, Madison moved to foreclose on the property, claiming Five Star defaulted on a $585 million construction loan tied to the project in October 2024. Five Star filed for Chapter 11 bankruptcy protection on Nov. 4, 2025, days before the scheduled foreclosure sale.
The hotel portion of the Ritz-Carlton development was originally expected to open in 2019. A new opening date has not been announced.
— Chris Malone Méndez
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