Big Isle hotel deal falls through

A multimillion-dollar deal to purchase the Fairmont Orchid Hawaii hotel on the Big Island has fallen through.

The owners, global real estate investment firm Westbrook Partners LLC and minority stake-holders, San Francisco-based Farallon Capital Management LLC and Lodging Capital Partners LLC of Chicago, have pulled the four-diamond luxury hotel off the market, according to sources familiar with the situation.

The 540-room hotel on the prized Kohala Coast was awarded to an undisclosed buyer late last year, but the sale fell through in January after the buyer failed to meet the sales price following turmoil in the credit markets, sources say.

Instability within the credit markets is affecting major deals across the country, as financing becomes more difficult and buyers attempt to negotiate lower prices, which occurs more frequently in volatile markets, said Mike Hamasu, director of consulting and research at Colliers Monroe Friedlander Inc.

"As long as the market is uncertain in terms of the financial markets ... there's probably going to be a number of transactions, at least in the near term, that're going to face additional scrutiny, which makes it more difficult to secure financing," he said.

Westbrook Partners bought the 540-room hotel in 2005 for $250 million from Fairmont Hotels & Resorts Inc., which gained a $109 million profit from the sale.

The 32-acre oceanfront resort, which has a 25-year management contract with Fairmont, had attracted 37 interested buyers last July when the property went on the market, Aven Wright-McIntosh, the hotel's director of public relations, said at the time. Yesterday Wright-McIntosh referred calls regarding the hotel purchase to Steven Kisielica, a principal of Lodging Capital, who didn't return calls for comment. Representatives of Westbrook Partners and Farallon Capital couldn't be reached for comment yesterday.