Thursday, May 17, 2001

Mortgage holder
awarded Waikiki
Beach Hotel ownership

Lone bidder Hawaii Ventures
offers $80 million

By Russ Lynch

The holder of the mortgage on the 719-room Hawaiian Waikiki Beach Hotel yesterday won ownership as the only bidder in a foreclosure auction for the property.

In a deal subject to court approval and other processes that could take more than a month, Hawaii Ventures LLC won with a bid of $80 million, about the amount it is owed. The money will not change hands because the lender is simply writing off the loan and taking over the property.

Hawaii Ventures, a subsidiary of New York-based lender Leucadia National Corp., said earlier that if it gained ownership of the hotel it would hire Aston Hotels & Resorts to manage it. Hawaii Ventures also plans a $30 million renovation at the hotel, which used to be a Holiday Inn.

Aston said it expects to take over management in early July. The hotel will stay open during the yearlong renovation, which will improve all the public and retail areas, the restaurants and the hotel rooms.

Yesterday's auction outside state Circuit Court attracted a demonstration from the International Longshore & Warehouse Union, which represents 232 employees at the hotel. Carrying signs and calling out slogans such as "Don't throw us out like old furniture" and "We should be part of the deal," about 30 ILWU members aired the message that they are loyal and qualified employees who stand to lose their jobs.

Aston has said that it would advertise for workers, conduct interviews and make hires conditional on Hawaii Ventures' planned acquisition. The union is taking that to mean that its members may or may not be rehired and that the ILWU contract will be lost.

At the very least, said Ray Camacho, ILWU Oahu division director, the union members need some $2.3 million in vacation and severance pay to which they are entitled.

Aston declined to comment as did attorneys for Hawaii Ventures.

The union attempted to bid $23,200 to buy the hotel, a symbolic gesture based on what Camacho said was a pledge of $100 from each employee, but court-appointed foreclosure commissioner Patricia Kim Park declined to accept the bid because the union did not have the required 10 percent of its bid in cash or a cashier's check.

She said that anyone willing to bid 5 percent more than the winning bid will have an opportunity to reopen the process at a confirmation hearing in a couple weeks.

Aston said the property will get a significant new look, emphasizing its position as the last property in the Waikiki strip before Diamond Head. It will also be the largest hotel in the Aston stable of 35 condominium resorts or hotels on the four major islands, said Kelvin Bloom, executive vice president and chief operating officer of Aston.

The hotel has notified its employees that their jobs will be terminated as of June 30, but Aston said it will begin the hiring process before that.

Leucadia National acquired the mortgage on the two-tower hotel and its two parcels of land, a fee simple piece of about 7,300 square feet and a leasehold lot of 58,000 square feet, in June.

Leucadia got the mortgage from Mitsui Bank & Trust Co. after Otaka Inc., the hotel's owner, defaulted on its loan.

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