Foreclosed resort will be sold off at auction
By Harry Eagar
The Maui News
February 9, 2010
Honolulu real estate developer and broker Chris Lau has been appointed commissioner to sell the Makena Beach and Golf Resort, which was foreclosed last year. The auction probably will be scheduled for April.
It apparently will be the largest foreclosure sale in Maui County history. Lenders are owed $192.5 million (plus additional fees and accrued interest) on the property that was originally the Maui Prince Resort.
The resort continues to operate under the supervision of a court-appointed receiver, Miles Furutani, as Makena Beach and Golf Resort.
On Monday, General Manager Kelly Lee said: "The performance at the resort has improved substantially. 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."
Second Circuit Judge Shackley Raffetto authorized appointment of a commissioner last week and later appointed Lau.
The sale of the resort in 2007 was for much more than $192.5 million. It fetched $565 million at what turned out to be the top of the market. Maui developer Everett Dowling and Morgan Stanley put together the purchase, which included equity and secondary loans.
Those investors and lenders have lost whatever they put in, as their portions were not protected by a mortgage of the real property. Besides the hotel, the resort includes large expanses of potentially developable resort land.
While ownership will change hands, no one expects any changes for employees, visitors and guests.
Lau said: "My job, ordered by the court, is to transition ownership since the current owners could not pay the mortgage. I expect the resort to operate 'business as usual' throughout this process."
The hotel has been managed by Benchmark Hospitality International since September.
Barry Sullivan, attorney for the foreclosing lender, said: "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."
The auction will not be the last word. In Hawaii, a foreclosure bid goes to the Circuit Court for confirmation. Anyone can reopen the bidding by topping the open auction bid by 5 percent.
On smaller properties, the real bidding often happens before the judge and not on the courthouse steps.
After the auction is held, confirmation by the court and closing on an asset of this size typically takes another three to four months.
Wells Fargo is not the lender in the foreclosure but the trustee for the mortgage holders. It foreclosed on their behalf last August.
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