|By Allison Schaefers, The Honolulu
Star-AdvertiserMcClatchy-Tribune Regional News
March 26, 2012--The Days Inn-flagged Maui Oceanfront Inn is for sale as part of a bankruptcy by its owner, Western Apartments Supply & Maintenance Co.
The San Diego-based company, which owes about $12.3 million to its mortgage-holder, OneWest Bank, filed Chapter 11 bankruptcy last April.
More than 50 creditors were named in the petition filed by Carroll Davis, president of Western Apartments.
Investors have been keenly interested in the 87-room property, which sits on Keawakapu Beach at the gateway to Wailea and houses Sarento's on the Beach, a AAA Four Diamond restaurant, said Bankruptcy Trustee Joseph Toy.
"About 25 parties contacted me during the bankruptcy even before we went to market," Toy said. "That's a lot of interest."
Toy, who was appointed trustee in August, began accepting offers March 19 and will continue taking them for six weeks.
OneWest Bank, which holds the first and second mortgages secured by the hotel, has stated that it will limit any bid to $7 million, Toy said, so "only bids in excess of $7 million will be considered."
A preliminary hearing date for the motion to confirm the winning bid has been set for May 21, he said.
Local entrepreneurs, mainland investors and large equity funds have requested more information about the property, which is one of the few beachfronts for sale in Hawaii, Toy said.
The hotel, built in 1973, has another 22 years on its state land lease, he said. Western Apartments Supply & Maintenance, which bought in 2000, renovated the exterior and interior in 2001 and made more interior improvements in 2007, Toy said.
Hawaii hotels during the past several years have gone through a fair amount of sales, management changes and debt restructuring as revenues declined more steeply and quickly than anticipated and investors were scarce.
From 2006 to 2009 the industry lost 30 percent of its revenue per available room and 15 to 20 percent of occupancy and average daily rate, Toy said.
However, the Maui Oceanfront sale comes at a time when Valley Isle hotels are doing well and investor capital is readily available, he said.
"A year ago this sale would have been tougher," Toy said. "Right now there is an abundance of investment capital circling the market looking for a property to acquire, but there are few properties available."
Occupancy at the Maui Oceanfront averaged 48.9 percent in 2009 but has improved steadily, according to the hotel's operating statement. Occupancy averaged 67.4 percent in 2010 and rose to 78.1 percent last year, the statement said.
Occupancy has been above 90 percent since December, Toy said.
Sarento's, which provides $300,000 to $400,000 in annual rent, is another major attraction for investors, he said.
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