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Owners of Four Upscale Hotels on Three of the Hawaiian Islands Consider Selling
Properties with Estimated Value Between $500 Million to $1 Billion

Local Analyst Sites Many Interested Investors for Island Properties

By Andrew Gomes, The Honolulu Star-AdvertiserMcClatchy-Tribune Regional News

May 24, 2012--Four luxury hotels on three islands could be destined for new ownership and fetch between an estimated $500 million and $1 billion.

Japan-based Seibu Group has retained real estate investment banking and brokerage firm Eastdil Secured to market its three hotels -- the Mauna Kea Beach Hotel and Hapuna Beach Prince Hotel on Hawaii island and the Hawaii Prince Hotel Waikiki on Oahu.

Donn Takahashi, president of the local Seibu subsidiary Prince Resorts Hawaii, said the exploratory effort is part of the company's preparation for having its stock re-listed on the Tokyo Stock Exchange later this year or early next year.

"It's just one of many options," he said. "Seibu Group has not made any decisions about the sale of any of our assets."

In another potential deal, Bloomberg News reported Wednesday that an investment group is considering selling the Grand Wailea Resort Hotel and Spa on Maui.

Local hotel industry analyst Joseph Toy of Hospitality Advisors LLC said there is a ton of interest among investors seeking to acquire Hawaii hotels benefiting from the local tourism industry recovery.

"There are far more buyers than properties," he said. "This is going to be a very, very active year in transactions."

Toy said sellers include a significant number of owners facing maturing debt or difficulties such as foreclosure or bankruptcy.

The Grand Wailea is being considered for sale by an investment group led by New York-based hedge fund Paulson & Co. as part of an effort to bring a collection of hotels out of bankruptcy, according to Bloomberg.

Plans by the Paulson group involve selling the Claremont Hotel Club & Spa in Berkeley, Calif., and the Arizona Biltmore resort. Bloomberg reported that the sale effort also may include the Grand Wailea and La Quinta Resort & Club in California, though the investors may decide to keep the Grand Wailea and La Quinta.

In either case, the Paulson group plans to remove Hilton Worldwide Inc. as manager of the four hotels, Bloomberg said, citing bankruptcy court documents.

The Paulson group acquired the hotels as part of a foreclosure. A previous owner bought the 780-room Grand Wailea in 1998 for $373 million, and since then the hotel has traded hands as part of a portfolio of hotels.

The three Seibu hotels are valued at around $500 million, according to Real Estate Alert, a subscription-based publication for institutional real estate investors. The 350-room Hapuna and 258-room Mauna Kea hotels are adjacent and share an 1,839-acre site with two 18-hole golf courses. The Mauna Kea hotel completed $150 million in repairs and renovation in 2008 after being damaged and closed by an earthquake in 2006.

The 578-room Hawaii Prince overlooks the Ala Wai harbor, and includes the 27-hole Hawaii Price Golf Club in Ewa.

Seibu is a conglomerate largely invested in real estate, construction, the Seibu Railway and about 50 Prince hotels in Japan. The company sold the 1,800-acre Makena Resort including the Maui Prince Hotel in 2007 for $575 million.


(c)2012 The Honolulu Star-Advertiser

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