Makena Resort & Prince Hotel to Auction

Maui News March 11, 2010 By CHRIS HAMILTON, Staff Writer WAILUKU – The 1,800-acre property formerly known as Makena Resort and the Maui Prince Hotel will be up for public auction April 29 in the lobby of the Wailuku courthouse. The auction begins at 11 a.m. at 2125 Main St. and is believed to be the largest foreclosure sale in Maui County history. The transaction is a fee-simple sale, with no minimum bid required, according to the notice of foreclosure that appeared on Page C8 of Wednesday’s Maui News. Last month, 2nd Circuit Judge Shackley Raffetto appointed Honolulu real estate developer and broker Chris Lau to conduct the sale for what is now called the Makena Beach & Golf Resort. Bidders must register with Lau five days prior to the sale, and the winner must be able to provide a 10 percent down payment April 29. The South Maui property stretches from Haleakala’s slopes, across dryland forests and over lava-rock expanses to beaches. The auction comes after Maui developer Everett Dowling and Morgan Stanley Real Estate defaulted in August on $192.5 million in loans for the original purchase price of $565 million in 2007 from the Japanese firm, Seibu. Dowling and Morgan Stanley lost their entire investment in the property, which is said to include millions for development planning, design, publicity, archaeological and engineering surveys, land preparation and permit-acquisition work. On the other side, the lenders are owed an unspecified amount of accrued interest and fees. Wells Fargo Bank is acting as trustee for the collection debts owed investors holding the resort’s commercial mortgage securities. The bank, which managed to come out of mortgage crisis relatively unscathed, is reportedly in the running itself to buy the Makena Beach & Golf Resort. The buyer will need to have deep pockets and receive the approval of Raffetto, who’s been the property’s arbiter, landlord and watchdog for months now. The auction is for the entire property. That includes 36 holes of golf, 18 of which need to be rehabilitated before reopening, a clubhouse, 2,500 square feet of retail space, 5,200 square feet of meeting rooms, three restaurants and bars, a swimming and wading pool and snack bar, seven outdoor areas for weddings and parties, jacuzzis and a lattice work of hiking and mountain-biking trails. The real prize, aside from shoreline access points such as Makena Landing, is 1,300 acres of vacant land. That’s because Makena Beach & Golf resort also has an assortment of lucrative Maui County residential and commercial entitlements for further development, which County Council members approved at the end of 2008 to spur construction jobs that never materialized. Dowling, who also has said he would like to regain ownership, had planned to build a luxury-home subdivision and spa, among other amenities, and rebuild the 310-room hotel – before the bottom fell out of the economy. Without enough cash from pre-sales coming in, he lost the capital required to continue with a project estimated to be worth billions when hundreds of homes, time-share units and condominiums were finished after more than a decade of construction. Many county officials have said they are hopeful that once the economy rebounds, Makena Resort, and all the work and contract dollars it would provide to Mauians, will get back on track. Prince Resorts Hawaii quit as the resort’s management in September, after operating the property since the early 1980s. The court-appointed receiver, Miles Furutani, replaced Prince Resorts with the Mainland company, Benchmark Hospitality International, to oversee the hotel, golf course and land until the resort is acquired by a new owner. General Manager Kelly Lewis has said Benchmark has substantially improved the resort’s financial performance. In the meantime, the management company also has been able to retain dozens of employees.