Hospitality

Denver company to purchase Hotel Hana-Maui

A Denver-based real estate investment and development company plans to enter the Hawaii market with the purchase of the Hotel Hana-Maui & Honua Spa, an award-winning luxury property located on Maui’s eastern coast.

Amstar Group LLC said yesterday it expects to take possession of the AAA Four Diamond Award property in May after its deal with the current owner, Ohana Hotel Co., closes for an undisclosed amount. An Amstar subsidiary, Green Tea LLC, will take over management of the iconic 70-room hotel, which opened in 1946 and earned numerous industry accolades last year, including two Travel + Leisure Magazine “World’s Best Awards.”

“We are choosing to invest in the Hotel Hana-Maui because we recognize Hana as a special place,” said Joy Berry, president of Green Tea LLC. “Our efforts will be focused on travelers who have an interest in ‘doing,’ offering them a wide variety of activities and providing them with a memorable experience in a memorable place.”

Approximately 200 hotel workers, some of whom are represented by the Unite Here! Local 5 union, were notified in January that they could lose their jobs as a result of the asset sale. A spokeswoman for the company said workers will be laid off by Ohana when the deal closes and will have to reapply for jobs with Green Tea, which will host an employment fair for displaced workers and community job-seekers in the next few weeks. However, Amstar’s immediate repositioning strategy will reduce jobs by eliminating positions and outsourcing.

“A change in the existing operational model is critical to turning the hotel around and into a viable operation,” Berry said.

The fate of the hotel, which had gone on the market for between $60 million and $70 million in 2007, had been uncertain for some time. Owners took it off the market in the summer of 2008 when the national credit crunch and global downturn went into full throttle, and San Francisco-based Passport Resorts LLC, the property’s minority owner, sold its stake at the beginning of last year to a majority group of California investors in Ohana Hotel. In the last year or so, Hotel Hana-Maui, along with many other neighbor island properties, had seen occupancy drop between 25 and 30 percent.

State Sen. J. Kalani English (R, Hana-East and Upcountry Maui-Molokai-Lanai-Kahoolawe), whose first job was at Hotel Hana-Maui, welcomed Amstar to Maui.

Although Amstar is new to Hawaii, its $2 billion portfolio includes a mix of office, multifamily and hospitality holdings.

“All of Hana has experienced the uncertainty surrounding the Hotel Hana-Maui’s financial condition, and I think we are all extremely satisfied with the plans we have seen for the hotel’s future,” English said.

Although hotel jobs will be lost under the new ownership model, English said following a meeting with Amstar executives that he is “comfortable that they intend to be good corporate neighbors and focus on having a positive impact on our community.”

Source:  SB

FOR SALE: Makena resort

The Maui beach and golf property has recovered from a near shutdown last year

The Makena Beach and Golf Resort will be up for sale as early as April after recovering from a near shutdown last year.

Maui Circuit Court Judge Shackley Raffetto entered an order of foreclosure yesterday for the property, and has appointed a commissioner to sell the resort to satisfy the unpaid mortgage of about $192 million.

Formerly the Maui Prince Hotel, the resort received a reprieve from a shutdown in September after it went into receivership and had a new management company in place.

Since then the resort’s performance has improved “substantially,” said Kelly Lewis, general manager. “We are excited about the improvements we have been able to offer in guest experience and look forward to announcing our new restaurant and lounge offerings next month. Our goal is for this transition on the ownership side to be completely seamless for our guests.”

There are no expected changes for employees or visitors. The property has been managed by Benchmark Hospital International since September, with attorney Miles Furutani overseeing the receivership.

The turnaround can be attributed to more aggressive and effective marketing, said William Kennison, director of International Longshore and Warehouse Union Local 142 on Maui.

“We’ve been very happy with Benchmark,” he said. “They have a good marketing arm, and they’re able to attract more tourists. I think the employees can see it, too.”

Kennison said the union’s more than 250 employees at the property have been on pins and needles waiting to see what the outcome would be.

“We’re hopeful that they will maintain the hotel as well as keep Benchmark as the management team,” Kennison said.

Raffetto appointed Honolulu-based real estate developer Chris Lau as commissioner for the foreclosure sale. Lau, vice chairman of Towne Development of Hawaii, must now take an inventory of all property.

Lau is required to advertise the auction once a week for three weeks, the last publication being no less than 14 days before the sale. The auction is tentatively scheduled to take place sometime in April on the steps of Maui Circuit Court.

“In order to qualify for the bid, they would need to have 10 percent of the bid amount on hand at the time of the auction,” Lau said. “I believe we can have an auction by April.”

Wells Fargo, the trustee of the mortgage lender for the resort, petitioned for receivership and new management to keep the asset open, after owners Everett Dowling Co. and a Morgan Stanley real estate fund walked away from their investment. An additional $227 million of debt has not been secured by the mortgage.

“We have complete confidence in Mr. Lau and look forward to concluding this process over the coming months,” said Barry Sullivan, attorney for Wells Fargo Bank. “Thanks to the work of Benchmark and the receiver appointed last September, resort performance has not only stabilized, but we see very positive momentum, and we look forward to that continuing.”

After the auction is held, the court will select the winning bidder. Closing on an asset of this size typically takes another three to four months.

Source: SB

Big Island home sells for $26.2 million

Last year wasn’t such a good year for Hawai’i real estate. But for Hualalai Resort, 2009 was great.

The Big Island resort yesterday reported that one of its homeowners sold their property for $26.25 million — the most ever paid for a home in Hualalai Resort’s 13-year history.

Resort officials also said the Dec. 14 sale was the largest for a single home last year in Hawai’i. Resort officials would not release a photo of the home.

The highest price paid for a Hawai’i home in 2009 was an oceanfront compound on Kaua’i with a 15,000-square-foot house and two 4,000-square-foot guest bungalows. The 174-acre Kaua’i property, called Tara Plantation, was developed about a decade ago by entertainment executive Peter Guber, and sold for $28 million in November.

Other homes in Hawai’i have sold for more than $30 million in prior years.

For all of last year, the median price of homes sold on the Big Island was $279,000, down from $345,000 the year before, according to Hawai’i Information Service.

The Hualalai Resort home is 8,630 square feet with five bedrooms, 5 1/4 bathrooms, an open-air dining room and living room pavilion on a 1-acre oceanfront parcel with botanical gardens, four lava rock outdoor shower gardens, two oceanside hot tubs and one cold plunge pool.

Read More At HNA

Hana hotel sold

The Hotel Hana Maui is being sold to an unidentified buyer, according to its owner, Ohana Hotel Co.

About 200 employees will be laid off by Ohana as of the closing date, which will be on or about March 26, according to the filing by Ohana’s management company, Arden Grove Hospitality. However, the owners expect the buyer to continue operating the property as a hotel “without interruption.”

The company told the state Department of Labor and Industrial Relations about the pending sale to comply with federal and state plant closing notification laws.

Some employees are represented by the Unite Here Local 5, AFL-CIO union.

Ohana purchased the historic hotel at 5031 Hana Highway in 2001. The resort, opened in 1946, has 70 beachfront acres and 70 rooms.

Lender takes Fairmont Orchid

A lender quietly acquired The Fairmont Orchid Hawaii in lieu of foreclosure earlier this year, giving the luxury hotel at Mauna Lani Resort on the Big Island its fourth different owner in seven years.

An affiliate of New York-based lender Barclays Capital in June repossessed the 540-room hotel from Westbrook Partners LLC, a Boston-based real estate investment firm that bought the 32-acre oceanfront property for $250 million in 2005, property records show.

A spokesman for Barclays Capital declined to comment. The company is expected to keep the property at least until the local hotel and real estate markets improve.

The deal hasn’t affected the operation of the hotel, which is managed under a long-term contract by Fairmont Hotels & Resorts Inc. But it adds to a growing number of Hawai’i hotels being taken over by lenders amid the economic downturn that has hurt the state’s tourism industry and investors that paid hefty prices for hotels in the past few years.

“I expect there’s going to be more of that,” said Joseph Toy, president of local tourism industry consulting firm Hospitality Advisors LLC. “Clearly the distressed hotel market is very active.”

Toy said the economic downturn was so sharp that even sophisticated hotel buyers who had significant capital reserves are having problems keeping their mortgages out of default.

Westbrook bought the Orchid in December 2005, and 18 months later had listed the property for sale through brokerage firm Eastdil Secured LLC. The offer attracted significant interest, but didn’t result in a sale.

The $250 million paid by Westbrook was a record price for the hotel, and was almost twice what the previous owner paid.

Westbrook bought the hotel from Fairmont, which had paid $140 million in 2002 to acquire the hotel from Los Angeles-based investment firm Colony Capital LLC, which in 1995 paid $75 million for the hotel then known as the Ritz-Carlton Mauna Lani.

Ritz-Carlton Hotels and a Japanese partner, ONKD Inc., spent $175 million to develop the property, which opened in 1990.

Other Hawai’i hotels that have faced mortgage trouble recently include the Ilikai in Waikiki, which was acquired by a lender through foreclosure in July, and the Maui Prince Hotel, which is under receivership after a consortium of lenders sued to foreclose on the property last month.

Source: HNA

Coastal resort planned for Hawaii’s Big Island

Plans are being revived by an Oahu contractor for a coastal resort near South Point in the Kau district of the Big Island, Hawaii. Val Peroff, head of SteelTech, Inc., is preparing an environmental impact statement for the project envisioned for up to 1,970 homes or residential lots, 950 resort hotel or condominium units, a 36-hole golf course, and an airstrip. The developer also said it hopes to power the project with alternative energy if feasible.

No cost estimate was included, but the developer hopes to begin construction in 2012 and substantially complete Kahuku Villages in three phases over 10 years. To proceed, the project would need state Land Use Commission approval, a county zoning change, and other permits. Prior Land Use Commission approvals are no longer valid on the property, which is classified for agriculture and conservation use. The developer plans to petition the commission to reclassify about 4,760 acres, or 29 percent, of the property, for urban and rural use, including 3,670 acres of conservation land.

A shoreline preserve, land for agriculture or renewable energy production, a commercial village with schools, and a cultural research and demonstration center are also part of the plan, called Kahuku Villages, slated for the site covering 16,457 acres, or nearly 26 square miles, of mostly barren lava.

Hilo resident Gil Kahele, who challenged the Hawaiian Riviera project as head of community group Pa’a Pono Miloli’i, said he still has concerns about cultural and natural resources on the property and also questions building in an area that could be threatened by lava. He said he looks forward to a thorough environmental review and will reserve comment on Kahuku Villages until more details are available. Kahele did note that considerable opposition to the earlier project surrounded the marina, not a feature of Kahuku Villages.

Most of the land is lava with pockets of vegetation, including an ohia forest. Pohue Bay along the property’s shoreline is a site used by researchers trying to protect the endangered hawksbill turtle under a wildlife restoration project. The inland half of the property is next to Hawaiian Ocean View Ranchos, a mostly undeveloped subdivision of 1,229 residential lots. Further inland is the 10,697-lot subdivision Hawaiian Ocean View Estates that is more developed.

A “low-key” resort would be the project’s economic linchpin and is aimed at visitors seeking a remote get-away with opportunities to learn about turtle habitat and pre-contact Hawaiian cultural practices. “Although there may be some transient accommodations of higher exclusivity, there will also be eco-lodges (tentalows or cabins) affordable to the general public,” the filing said.

Maui Prince Hotel to Remain Open

The Maui Prince Hotel in Hawaii will remain open with a new management company in charge, according to an attorney for the lender that foreclosed on the Makena Resort last week, according to Pacific Business News. But the threat has been averted and the hotel has hired a new management company, Barry Sullivan, the attorney for lender Wells Fargo Bank, said Wednesday.

The loan was transferred to special servicing on 12 June 2009 due to imminent default, according to the aforementioned Fitch Ratings report. The borrower expects to keep the loan current by funding any operating shortfalls. The loan was scheduled to mature on 9 July 2009; however, the borrower advised the lender that they are not in a position to continue under the current capital structure and will not be exercising an extension of the maturity as contemplated in the loan agreement. The borrower is seeking to restructure the loan and is speaking to its mezzanine lenders about a possible purchase. The debt service reserve established at issuance has been depleted. The servicer conducted a property inspection on 7 May 2009, which resulted in a good rating.

Maui Prince Hotel closing

Prince Resorts Hawaii said Monday it plans to terminate its management contract and close the Maui Prince Hotel and the Makena North golf course next month.

The resort’s 380 full- and part-time employees were notified Monday that the Makena Resort hotel and golf course would close on Sept. 16, according to a statement from Prince Resorts Hawaii.

Lenders, represented by trustee Wells Fargo, filed a foreclosure lawsuit on Aug. 24 against the hotel’s owners saying they had defaulted on a mortgage of $192.5 million.

Maui developer Everett Dowling and Morgan Stanley had purchased the hotel and the 1,800-acre Makena Resort two years ago for $575 million from the financially troubled Seibu Group of Japan. Dowling did not immediately return a call from PBN seeking comment.

The lenders were “unable to meet the funding terms and conditions” the hotel operator required to keep the 310-room hotel and golf course open, Prince Resorts Hawaii President Donn Takahashi said in a prepared statement.

The hotel operator, Maui Prince Hotel LLC, has been in discussions with the lenders to fund the hotel’s payroll and accounts payable, which previously were the responsibility of the owners, he said.

“Maui Prince Hotel LLC cannot continue to operate the hotel without adequate assurance that funds will be made available to pay for payroll and operating expenses for the hotel and golf course,” Takahashi said. “As of our deadline, Friday, Aug. 28, we did not receive funding from the owner or the lenders to pay for past-due account payables, and as of our deadline today, Aug. 31, we had not received a favorable indication from the owner or the lenders that they are willing to guarantee the required funding going forward.”

Wells Fargo is taking immediate steps to keep the hotel open, the lender’s attorney said.

“Tomorrow, we will ask the 2nd Circuit Court on Maui to appoint a receiver to take over operation of the resort,” attorney Barry Sullivan said in a statement. “If approved, the receiver and its team will transition to a new management company to be approved to operate the Maui Prince Hotel and Makena Resort. We look forward to a smooth transfer with Prince Hotels.”

Prince Resorts Hawaii told employees that they would received up to 60 days’ severance under state law. The state Department of Labor and Industrial Relations said it was working with Maui Prince management and with the International Longshore and Warehouse Union on assisting the displaced workers.

Many of the employees have been with the hotel for more than five years, and some have been there since it first opened in 1986, Takahashi said.

“This is a heartbreaking scenario,” he said. “The Maui Prince Hotel is a well-run operation with a great heritage, excellent potential, and wonderful employees that has fallen prey to the economic downturn.”

Developer owes money to Hawaii hotel’s high bidder

The connection between Unity House and developer Brian Anderson goes deeper than its high bid this week of $8.5 million at a foreclosure auction for The Lotus at Diamond Head hotel.

Anderson owes the nonprofit organization several million dollars from a 5-year-old loan, and Unity House was in talks earlier this year to buy the former W Honolulu hotel from Anderson as a means to settle the debt.

“We initially got onto this because Brian owed us money,” said Unity House Chairman Jim Boersema. “We considered a number of options and one of them was the W hotel.”

The money owed is more than $4.5 million, according to documents from a lawsuit Unity House filed in June 2008 that is still pending in 1st Circuit Court.

Unity House was unable to work out a final agreement between Anderson and First Hawaiian Bank and Central Pacific Bank, which held mortgages on the property totaling more than $10 million.

After the first foreclosure auction, scheduled for June, was delayed, Unity House took another look at attempting to acquire the hotel.

“We basically decided a few weeks ago,” Boersema said. “We’ve liked the property; we think in the long run it’s going to be a good investment.”

Anderson’s company, Anekona W, purchased the hotel, which sits on leased and fee-simple land on Kalakaua Avenue’s Gold Coast, from Colony CSR Investors LP on Aug. 17, 2004, nearly five years to the day before Tuesday’s auction.

First Hawaiian Bank filed for foreclosure on the property in October, saying it was owed more than $4.9 million in principal, fees and interest from a $5 million loan. Central Pacific Bank also is owed about $5 million on a second mortgage. The sale to Unity House must be confirmed at a hearing in about 30 days, at which time other parties could still outbid the nonprofit.

The hotel was worth between $10.2 million, according to an appraisal ordered by Central Pacific Bank, and $16 million, the figure in an appraisal ordered by Unity House, which assumed the conversion of the 51 rooms into condominium hotel units.

Unity House had loaned Anderson $2.5 million in 2004, with an interest rate of 30 percent, due in March 2006, according to court documents.

In March 2008, the two sides had reached a settlement agreement, but the lawsuit said that Anderson, identified in the original complaint as John Doe, and his wife, Joan, had “failed and refused to pay the principal and all the accumulated interest” to Unity House.

In November 2008, the two sides reached a settlement compromise in which Anderson would turn over six condominium units on the 25th floor of the Ilikai by March 31 in lieu of paying back the loan. If the condos were not conveyed by that date, then Unity House would seek a judgement against the Andersons for $4.5 million plus 10 percent interest, according to court documents.

But the Ilikai itself was in foreclosure, and in May, New York lender iStar Financial took back the 203 residential units and the 16 commercial units after bidding $51 million at a confirmation hearing for the foreclosure auction. Anderson also lost the Kauai Beach Resort to iStar Financial through foreclosure a couple of weeks later.

Unity House did not receive title to the Ilikai units, and in June, the Andersons were named in the lawsuit, replacing the unnamed John Does.

Last week, the Andersons were named in an unrelated lawsuit filed by Pacific Rim Bank alleging they, one of their sons and a company called Lanihau Properties LLC owe nearly $1.6 million in principal, interest and fees from a $2 million line of credit opened on Aug. 25, 2006.

Anderson said Tuesday he had not seen the lawsuit and could not comment on it. He did not immediately return a call Wednesday seeking comment on the Unity House bid and lawsuit.

Anderson’s company, Anekona W, filed for Chapter 11 bankruptcy in June in an effort to prevent the Waikiki hotel from being sold at a foreclosure auction that same month. In July, he retained a broker to market the property for $14 million, but the Chapter 11 case was dismissed a week and a half later after the U.S. Trustee argued that the two mortgages on the property would leave little for other creditors.

Earlier this month, Anderson hired a new bankruptcy attorney and, less than two hours before the auction’s scheduled time on Tuesday, attempted to have the Chapter 11 case reinstated and the auction halted, claiming there was a buyer interested in purchasing the notes from the two banks

After a brief deliberation, U.S. Bankruptcy Judge Robert Faris declined to grant Anderson’s motions, saying that the time between the foreclosure auction and the confirmation hearing would give an interested buyer plenty of time to step in and purchase the hotel.

Unity House, which was founded in 1951 by Arthur Rutledge, has approximately 10,000 beneficiaries, mostly members and retirees of the UNITE H.E.R.E. Local 5 hotel and restaurant workers union and the Hawaii Teamsters, Local 996.

The Lotus at Diamond Head, which is managed by Castle Resorts & Hotels, is a non-union operation.

Boersema said the hotel likely would continue to be managed by Castle, but it’s unclear whether the hotel’s employees would become organized under Local 5 if Unity House prevails at the confirmation hearing.

“We have to actually obtain title to it and then look at all the various options for that property,” he said.

Source: PBN

California-based firm will acquire Queen Kapi’olani and Mililani Golf Club

A Los Angeles-based hotel and golf course company has agreed to buy the Queen Kapi’olani Hotel in Waikiki and the Mililani Golf Club from local developer Bert A. Kobayashi.

Terms of the sales, which are expected to be completed Oct. 15, were not disclosed.

Kobayashi, principal owner of the real estate development and consulting firm Kobayashi Development Group LLC, had acquired the two properties as part of a bigger purchase from troubled Japanese company Sports Shinko seven years ago.

The buyer is LA Koreana Inc., a hotel and golf course owner and operator with properties in Korea, Japan and the Mainland. The company also owns the ‘Ewa Beach Golf Club, according to Wayne Williams, a principal with Warnick and Co., a firm that manages assets for LA Koreana.

Williams said it was premature to say what, if any, repositioning plans LA Koreana has in mind for the two properties if the sales close as scheduled.

The buyer has an obligation to assume collective bargaining agreements at both the hotel and golf course, according to the seller.

In the case of the 314-room hotel, the buyer isn’t obligated to retain employees, according to a notice the seller filed with the state Department of Labor and Industrial Relations. But a spokesman for UNITE HERE Local 5, the union representing 56 workers at the hotel, said a buyer would have to retain unionized workers.

For the golf course, the seller said LA Koreana intends to keep all employees.

Source: HNA

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