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Waikiki
Beachcomber
for sale

The hotel is being marketed
without an asking price,
sources say

---

By Tim Ruel
Star-Bulletin

The Waikiki Beachcomber Hotel has quietly been put back on the market by its Japan-based owner Kahaone Investment Corp., according to sources familiar with the property.

The 500-room hotel, on Kalakaua Avenue next to the International Market Place, is being marketed without an asking price by CB Richard Ellis, sources said. An official of the commercial real estate firm declined comment today.

Kahaone, a subsidiary of Mitsui Leasing USA Inc., bought the 26-story leasehold hotel for $84.6 million from Japan-based Azabu USA Inc. in 1992, according to state records. Mitsui officials could not be reached for comment. Azabu had bought the hotel from local investors Jay Shidler and James Reynolds for $60 million in 1987, records show.

The Beachcomber, built in 1970, and has long featured nightly shows by local entertainer John Hirokawa. The hotel has about 200 employees, 2,300 square feet of meeting space, and posts room rates ranging $200 to $850 a night.

Another local real estate firm, Colliers Monroe Friedlander, had put the Beachcomber on the market for $67 million in 1999. Colliers' agent Douglas Pothul said today the company could not secure an offer that would satisfy Kahaone.

Pothul said the hotel has a better shot at selling these days, now that Waikiki's tourism has rebounded and the hotel rooms are posting stronger occupancy. The property also has a great location in the middle of Waikiki, he said.

Pothul noted that a sale price would be impossible to predict because investors follow their own criteria and the Beachcomber's value is influenced by several factors.

One negative aspect is that the hotel's ground lease will come up for renegotiation with landowner Queen Emma Foundation in 2005, Pothul said.

"The reality is the shortness of the term is a huge hurdle," he said.

In November, when Marriott International Inc. bought the former Hawaiian Regent hotel in Waikiki for $125.5 million, the hotel's ground lease with landowner Queen Liliuokalani Trust was extended to 80 years, eliminating problems, experts said. The 1,304-room hotel is now called the Waikiki Beach Marriott Resort.

Another question for potential buyers of the Beachcomber is the future of the Liberty House store at the hotel. Last year, Liberty House said it believed it could make more income by subleasing the 40,000-square-foot outlet to another retailer.

Although Liberty House later said it had shelved that plan, the retailer's current intentions remain unclear. "It's premature to come to any conclusion about what we may or may not do in our Waikiki store in light of the imminent sale of the property," Barbara Tunno, vice president of sales promotion, said today.

Liberty House is poised to emerge from its nearly 3-year Chapter 11 reorganization bankruptcy, a situation that previously frustrated efforts to sell the hotel, Pothul said. "That was a big objection of the investors two years ago," he said.