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iStar Financial Confirms Closing of Ilikai Hotel Operations in
Waikiki, Hawaii; Condos & Time Shares Not to be Affected

By Rick Daysog, The Honolulu AdvertiserMcClatchy-Tribune Regional News

Jul. 8, 2009--The new owners of the Ilikai Hotel in Waikiki said they plan to shut down hotel operations tomorrow, resulting in the loss of at least 65 full-time jobs.

New York-based iStar Financial confirmed that the 203-unit hotel portion of the property will be closed for an indefinite period due to operating losses of several hundred thousands of dollars a month.

The closure will not directly affect the remaining 806 condominium and time-share units and the property's common areas, which include the hotel's pool.

"The company has explored all available options to avoid the shutdown of the hotel operations and recognizes the impact such a decision will have on the community, condominium owners and residents, hotel employees and guests," iStar said in a news release.

"The company continues to evaluate possible uses for the property that will address community needs."

IStar will take over the Ilikai on Friday. The company is acquiring the landmark hotel from developer Brian Anderson's Anekona Development through a foreclosure action.

IStar said guests have been notified and will be accommodated at nearby hotels. Future reservations will be rebooked at other hotels in the area.

Built in 1964 by legendary local dealmaker Chinn Ho, the Ilikai is part residential condominium, part hotel overlooking the Ala Wai Boat Harbor.

The hotel's popularity dates back to the late 1960s when the long-running television series "Hawaii Five-0" featured the hotel in its opening credits.

IStar is a publicly traded real estate investment trust that's not in the hotel management business. The company's subsidiary, iStar FM Loans LLC, acquired the $141 million mortgage on the property in 2007 from Fremont Investment & Loan.

iStar filed a foreclosure suit against developer Anekona in August 2008 after it defaulted on the loan.

According to iStar's foreclosure lawsuit, iStar was owed about $72.7 million at the end of October on loans that Anderson defaulted on. In April, iStar bid $35 million for the 203 condominium units that make up the hotel portion. IStar doesn't have to pay $35 million for the hotel, but just needs to deduct that from the $72.7 million it is owed.

IStar said it hasn't been able to find ways to significantly cut costs, leading to its decision to close the hotel.

Members of the hotel workers' union, UNITE HERE Local 5, are urging iStar to keep the Ilikai open and to retain its workers. The union has scheduled a vigil this afternoon in support of the Ilikai's workers.

The hotel says it employs 65 full-time workers but the union puts the staffing at about 75 full-time equivalent workers. Local 5 said the hotel's staff includes another 45 workers that are not on active status.

Reach Rick Daysog at


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