Wednesday, August 25, 1999

Turtle Bay hotel
weighing offers
from mainland

The property with a $50 million
price tag is one of a dozen
isle hotels up for sale

By Peter Wagner


The Turtle Bay Hilton says it is considering several "potentially acceptable" offers from mainland hotel owners interested in the 50-acre property, currently asking $50 million.

"There has been significant interest from several qualified buyers," said Mark Johnson, project director at hotel owner Kuilima Resort Co.

The 487-room North Shore property is among a dozen or more Hawaii hotels up for sale, including the 800-room Ilikai/Hotel Nikko Waikiki, the 530-room Kona Surf Resort on the Big Island, and the 387-room Ihilani Resort & Spa.

Turtle Bay and the Kona Surf are currently listed by Hodges Ward Elliott, an Atlanta-based hotel broker. The Ilikai has retained New York firm Tishman Hotel Corp. as its broker and the Ihilani is being brokered by Goldman, Sachs & Co.

Honolulu brokers say at least 10 other hotel properties are more quietly on the market, many of them pressed by their Japanese lenders to sell.

"There has been a mandate by the Japan Ministry of Finance and the Bank of Japan that these properties clean up their less-than fully performing loans," said Honolulu real estate appraiser and developer Robert Hastings. "I think they're performing below the anticipation of the buyers."

Some other recent listings include the 502-room Waikiki Beachcomber Hotel on Kalakaua Avenue; the 247-room Aston Coral Reef Hotel on Kuhio Avenue; and the Makaha Valley Resort.

Hastings said some cash-heavy investors he's seen shopping for bargains recently include New York investment brokers Sonnenblick Goldman Corp; Goldman, Sachs; Tishman Hotel Corp.; and Lehman Brothers Holdings Inc.

"There's been a lot of bad press about the state of Hawaii's economy but now they're coming back," Hastings said.

Turtle Bay Hilton Golf & Tennis Resort owner Kuilima Resort Co. was bought last year by a partnership between New York firm Oaktree Capital and Honolulu firm Bill Mills Development Co. The deal included the hotel and about 1,000 acres of property. The sale price was not disclosed but was believed to be a considerable discount from the $127.5 million that the seller, Japan-based Asahi Jyuken Co., paid for the property in 1988.

Johnson yesterday said there were no initial plans to sell the hotel, on the market for about five months.

"The only reason we decided to list the hotel was in response to the number of inquiries we received about it," he said.

A number of buyers -- hotel owners, investment bankers and others -- have been in town looking for bargains, Johnson said.

"Hawaii is viewed finally as a value investment," with a turnaround generally viewed just around the corner," he said.

As for property surrounding the hotel, Johnson said the company is considering possible future development of new hotel properties, some residential and a shopping village on parcels already zoned for the resort-related uses.

"We do feel there is a long-term value to the area as a world class master-planned resort destination," he said.

Meanwhile, Johnson noted that his firm may be interested in hotels currently up for sale in Hawaii. He wouldn't disclose which. "A number of properties are being quietly marketed by their owners or lenders," he said. "We have an interest in perhaps acquiring some of those as well."

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