STAR-BULLETIN / 2007
After a buyer was unable to acquire adequate financial backing for ResortQuest in Waikiki, the hotel was pulled off the market in anticipation of a market slowdown.
ResortQuest flagship off market
The mainland owners of ResortQuest
's flagship Waikiki hotel have pulled the property off the market in the wake of an economic slowdown affecting most major deals in Hawaii.
A prospective buyer was under contract to purchase the ResortQuest Waikiki Beach Hotel, formerly known as Aston Waikiki Beach Hotel, up until earlier this year, but failed to secure adequate financing for the acquisition, according to sources familiar with the deal who asked not to be identified.
"We've opted to do some additional capital improvements to that building ... before considering putting it on the market again," said Ted Meyer, a spokesman for Germany-based Deutsche Bank Group, whose real estate management subsidiary is the majority owner of the 644-room Waikiki beachfront hotel at 2570 Kalakaua Ave.
However, the owners are entertaining offers from multiple bidders for ResortQuest Kauai Beach at Makaiwa, formerly known as Courtyard by Marriott Kauai at Waipouli Beach, a 311-room hotel at 650 Aleka Loop in Kapaa, he said.
New York brokerage firm Eastdil Secured LLC was contracted last year to simultaneously market the properties, which cater to Hawaii's mid-price visitor segment.
Tennessee-based Gaylord Entertainment Co. holds a 19.9 percent ownership stake in the Waikiki property and an 18.1 percent equity interest in the Kauai hotel. A Gaylord representative was unable to comment before press deadline yesterday.
A number of large transactions that hinge on capital market financing have been stalled due to the tight credit markets, said Joseph Toy, president of Hospitality Advisors LLC.
"Some major assets have been pulled off the market because of the inability to close," he said. "We've obviously seen a very drastic slowdown in transactions."
"For instance, the California owners of the Hotel Hana-Maui and Honua Spa pulled the four-diamond luxury resort off the market late last year following the credit crunch.
"Obviously the capital markets being where they are today it's not an opportune time to be a seller," said Peter Heinemann, manager of Ohana Hotel Co., the local unit of San Francisco-based Passport Resorts LLC. "When we put the property on the market it was a very robust seller's market. That situation no longer exists."
However, some hotel deals, particularly in the smaller property market, are moving forward with debt secured by regional banks that were not exposed to the subprime lending market, Toy said.