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Lender sues over loan


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POSTED: Wednesday, May 27, 2009

The lender for Kula 1800 Investment Partners has filed a foreclosure suit, alleging that the Maui property owner has defaulted on a $71.5 million loan.

;  Attorneys for iStar FM Loans LLC, the same lender that recently purchased foreclosed units at the Ilikai in Waikiki, filed the suit in Circuit Court in Honolulu on Friday.

Defendants listed include Kula 1800 Investment Partners, A/Z Kula LLC and A/Z Property Partners LLC, all of Delaware.

The investment partners originally purchased 1,841 acres of Upcountry land from Maui Land & Pineapple in 2006 for $22.9 million.

Kula 1800 Investment Partners received preliminary approvals to subdivide the former pineapple lands, with the intention of selling them off as 86 farm lots measuring between 15 to 340 acres apiece.

Private wells were completed at the site, but other than that, it seems to have been left undeveloped.

Most of the pasture lands currently are leased to the Maui Cattle Co., whose members include the Haleakala Ranch Co., Hana Ranch Partners and Olomalu Angus.

California-based Fremont Investment & Loan originally granted the $71.5 million loan to Kula 1800 in March 2006 but was acquired by iStar about a year later.

In the suit iStar said that Kula 1800 defaulted on its payments, and as of May 18 owes a total of $17.5 million in principal, plus $538,339 in interest and about $88,847 in legal and other fees.

The total balance including interest and other fees comes out to $18.2 million. Interest and late charges continue to accrue, according to the suit.

Charlie Jencks, who has served as a spokesman for 1800 Investment Partners, did not return calls for comment yesterday.

Maui general contractor Goodfellow Bros., which was once a part of the investment team, sold off its shares and is no longer involved, according to a spokesman.

At the time the project was proposed, the community was concerned about traffic and the impact on a neighboring hunting preserve, according to Dick Mayer, a Maui resident and retired economics professor.