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Wednesday, August 29, 2001



STAR-BULLETIN FILE
The Kona Surf resort has been closed since July 2000.



Big Island’s Kona
Surf Resort is sold


By Rick Daysog
rdaysog@starbulletin.com

The 535-room Kona Surf Resort on the Big Island has a new owner.

Louis Kau, president of Kamehameha Investment Corp., which owns the fee interest to the 20-acre property, said a mainland partnership has acquired the leasehold interest to the Kailua-Kona resort.

Kau declined to disclose the buyer's name but said the group is negotiating with KIC's parent, Kamehameha Schools, for an extension of its lease.

He said the buyer intends to invest a substantial amount in the property, which has been closed since July 2000.

The hotel's previous owner, Japan-based Otaka Inc., acquired the hotel in 1986 from Kona Pacific Associates for more than $20 million. But faced with mounting losses, Otaka announced last April that it would close the resort and layoff more than 200 workers.

The Kona Surf also has been the target of a $30 million foreclosure suit filed last year by California developer Moshe Silagi. Silagi unsuccessfully bid on the Kona Surf when the hotel went on the market and later acquired the note on the property from Chuo Mitsui Trust & Banking Co.

Built in 1971, the Kona Surf Resort is next to the 36-hole Kona Country Club and overlooks Keauhou Bay.

Initially, the hotel was marketed as a four-star resort but the property, like the now-shuttered Kona Lagoon resort nearby, has fallen into disrepair and will require millions of dollars in renovations, hotel experts have said.

"I think it has tremendous potential," said John Michael White, president of Hawaii Land Co.

"I see the Kona Surf as the sleeper in the area."



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