Thursday, May 6, 2004

Operator walks
away from Nuuanu
Memorial Park

The landowners are suing cemetery
manager RightStar following
a two-year rent dispute

Nuuanu Memorial Park Ltd. is suing the state's largest funeral home and cemetery operator after RightStar Nuuanu Mortuary LLC severed ties with the downtown business following a two-year rent dispute.

Parent company RightStar Hawaii Management Inc., which bought eight funeral homes and four cemeteries for $35 million from British Columbia, Canada-based Loewen Group Inc., in 2001, had been trying to renegotiate its rent payments since shortly after the acquisition.

However, Nuuanu Memorial Park, headed by Han Ching and Alice Hahn, wouldn't renegotiate and RightStar President John Dooley said the company had no choice but to pull up stakes. Nuuanu Memorial Park said in its lawsuit that RightStar owed $275,000 as of April 6 and another $57,000 was due on May 1.

The suit said rent at Nuuanu Memorial was $656,000 a year and 12 percent of gross revenues and other expenses. The suit said the annual base rent was scheduled to increase to $820,000 in 2007 and to $1 million in 2012.

Nuuanu Memorial, which operated the mortuary until 1972 when it decided to lease the facilities, has resumed providing services at its property at 2233 Nuuanu Ave. It has renamed its business Nuuanu Memorial Park & Mortuary and Derwin Tsutsui, former assistant director of operations at RightStar, is the new director of mortuary operations.

"Since the company's start in 1949, we have helped countless numbers of families at the Memorial Park," said Alice Hahn, vice president and general manager of Nuuanu Memorial Park. "We look forward to being able to provide families with both mortuary and cemetery services."

Dooley said the Nuuanu facility wasn't profitable and that a rent reduction was need to make it feasible to operate.

"There was just no way to make it work," Dooley said. "Loewen never made it work in six, seven years. We had to buy these (funeral homes and cemeteries) as a package out of bankruptcy and we started almost immediately to renegotiate with the Ching family but to no avail."

Dooley said RightStar showed the Ching family historical financials and leases paid at other Hawaii mortuaries, but finally in January decided to stop making payments after not making any progress.

"We told them we could not continue to run the business under the terms that they have and that we couldn't have all our businesses carrying that one ... We just didn't walk away and they weren't surprised. It wasn't something that happened overnight and it had nothing to do with the financial condition of our company. It was not intelligent to operate as years go buy and create a financial negative at that location."

RightStar, whose biggest operation is Valley of the Temples Memorial Park in Kaneohe, has other facilities on Oahu, as well as Maui and the Big Island, and employs about 200 people.

About half of the 20 employees at Nuuanu Memorial decided to stay with that facility, Dooley said.

RightStar became the top funeral operator in Hawaii after Loewen Group filed for Chapter 11 reorganization bankruptcy and was forced to sell about 500 of its business. Loewen collectively had spent about $70 million during the 1990s in purchasing the eight funeral homes and four cemeteries in Hawaii that RightStar eventually purchased.

Clifford Hosoi, president and chief executive officer of Hosoi Garden Mortuary Inc., said Nuuanu Memorial is one of his mortuary's primary competitors and wasn't sure if Nuuanu Memorial's problems might bring his business more clients.

"For any families that they cannot service because of the ownership problems they have or transitional problems they have, we would be a viable alternative for those families who would wish to have their services in the downtown area," Hosoi said. "Whether that would translate into more business for us, I really can't say."


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