Hyatt Regency price cut by $35M
Hyatt Corp. is set to buy its Waikiki flagship property for $410 million
has won a $35 million reduction in the price it is paying to buy its flagship hotel in Waikiki.
The U.S. Bankruptcy Court approved on Friday the discount to $410 million from $445 million for the Hyatt Regency Waikiki Beach Resort and Spa, after Hyatt renegotiated the price with the property's bankrupt Japanese owner, Azabu Buildings Co. Ltd., and its creditors, who collectively agreed on the new deal, according to court documents.
The sale is contingent upon approval by the Tokyo District Court, since Hyatt is acquiring ownership of the 1,230-room hotel it has managed since 1976 through the purchase of Azabu's stock.
The bankruptcy court also is requiring Hyatt to put down a $35 million deposit in addition to the $44.5 million deposit it paid after confirmation of the sale last March.
Chicago-based Hyatt did not meet an extended deadline of April 3 to close on the purchase, but had been in negotiations to reduce the price following difficulties in obtaining financing in the tight capital markets, according to a source involved in the deal who asked not to be identified. Representatives for Hyatt in Chicago and Azabu didn't return calls for comment.
"For the property to move forward, the question of ownership really needs to be addressed," said tourism consultant Joseph Toy of Hospitality Advisors LLC. "A lot of issues hinge on stable ownership, including long-term capital investments and long-term positioning of the property."
The original $445 million price tag was aggressive in Hawaii's hotel industry, which for the past few years had become increasingly attractive to both mainland and foreign investors. However, the market has slowed dramatically over the past year, resulting in failed transactions or properties being pulled off the market altogether.
The sale includes the King's Village Shopping Center, which is owned by Azabu Buildings' wholly owned subsidiary, Azabu USA Corp.
The Japanese court is expected to approve the new deal, which is set to close in late June or early July.