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Marriott selling
Kapalua hotel
for $144 mil

Its sale of the Ritz-Carlton to
an East Coast group comes four
months after it bought the property

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By Tim Ruel
Star-Bulletin

Four months after buying the upscale Ritz-Carlton Kapalua on Maui and securing a long-term management contract for the hotel, Marriott International Inc. said today it is selling the 40-acre property for $144 million, the same price it paid for it.

Marriott, which bought the 548-room hotel for $144 million in October from its Japan-based owners, is selling the Ritz-Carlton to a joint venture that includes Marriott and affiliates of New York-based Blackacre Capital Management LLC. Blackacre officials could not be reached for comment.

The partnership, Capital Hotel Investments LLC, executed a similar deal in September with four hotels in Texas, California, Georgia and the U.S. Virgin Islands for about $274 million. Marriott, which sold the properties, continues to operate the hotels under long-term management agreements.

With the purchase of the Ritz-Carlton Kapalua, Marriott affiliate Ritz-Carlton Hotel Co. will continue to operate the hotel as a Ritz-Carlton.

Marriott, a Washington, D.C.-based hospitality giant, is probably keeping a stake in the Ritz to maintain some control over a property bearing its name, said Douglas Pothul, senior vice president for real estate firm Colliers Monroe Friedlander. "They're the ones who are going to be responsible for its success," said Pothul, who was not involved with the sale, but familiar with the property.

Marriott has made it clear it is not in the business of owning real estate. But the company, which has a market value of about $11 billion, appears willing to invest for a short period to ensure a management contract, which is its bread-and-butter business. "They've got so much cash they can buy anything," Pothul said.

Located on Honokahua Bay, the Ritz-Carlton Kapalua was developed for $206 million in 1992 by a joint venture between Osaka-based general trading company Nissho Iwai Corp., Maui Land & Pineapple Co. and Marriott's Ritz-Carlton Hotel. Marriott bought the property in October after the property had been listed for two years by Nissho.

The resort employs 800 people and charges rates ranging $295 to $2,500 a night.

Its sale follows the pending purchase of Maui's largest hotel -- the Hyatt Regency Maui on Kaanapali Beach -- by New York investment bank Blackstone Group. Blackstone is paying a reported $200 million for the 806-room resort. Hyatt Hotels Corp., which has held the long-term management contract for the hotel, also took an equity stake in the purchase.

Also on Maui, a Canada-based hotel chain has bought the 450-unit Kea Lani Hotel in Wailea for an undisclosed price. Canadian Pacific Ltd. owns Fairmont Hotels & Resorts, which will operate the property starting in the second quarter. One of Fairmont's equity owners is Prince Alwaleed Bin Talal, billionaire nephew of Saudi Arabia's King Fahd.

Meanwhile, Marriott in November completed its $125.5 million purchase of the former Hawaiian Regent Hotel, Waikiki's third largest resort, from Japan-based owner Otaka Inc. Marriott plans to renovate the 1,304-room hotel, which lies on leasehold property on the Diamond Head end of Waikiki.