Makena Resort

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

Makena Resort

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.”