$5.5M tops bids for 1,647-acre Kona parcel

The site includes a golf course and planned subdivision

The creditor of Makalei Golf Course and Ainamalu, a proposed 180-lot subdivision, on the Big Island offered the high bid at a foreclosure auction yesterday in Kona.

Delaware-based Gramercy Warehouse, who Circuit Court Judge Ronald Ibarra determined was owed a debt of approximately $24 million on the property, made the initial high bid of $5.5 million for the property, said Joseph Toy, the court-appointed receiver for the golf course and subdivision.

Located eight miles north of central Kailua-Kona, the 1,647-acre Makalei Golf Course site includes parcels above and below the Mamalahoa Highway. In addition to an 18-hole course, there is a driving range and restaurant on the property.

The foreclosure sale will not close until a judge approves the sale at a confirmation hearing, which is likely to take place in the next few weeks, Toy said. At that time, further bidding on the property could take place, said Toy, who has handled over $1 billion in non-paying loans for lenders since 2004 including the Kaanapali and Koolau golf courses.

"The auction was well attended and a number of parties expressed their desire to reopen the bids later," Toy said. " It's not unusual for more bidding to take place, but it's always at the discretion of the judge."

Given the turnout at the auction and the wide berth between the bid and the debt owed on the property, the upcoming confirmation hearing should attract more activity, Toy said.

"If the winning bid is far below the debt, there tends to be renewed interest in the property," Toy said. "Interest from potential buyers is piqued when there is the possibility of a huge discount."

For example, during the 1997 foreclosure sale of the Doubletree Alana Hotel in Waikiki, Toy said an initial bid came in at $18 million on $65 million of debt. But the sale closed at $37.5 million following another round of bidding that took place at the confirmation hearing.