WAILUKU – Wells Fargo Bank, trustee of the mortgage lending trust group that foreclosed on the Makena Resort last year, fended off two additional bidders Tuesday and prevailed – with a $95 million bid – to purchase the 1,800-acre property and the Makena Beach & Golf Resort.
The action occurred in 2nd Circuit Judge Shackley Raffetto’s courtroom, with the judge confirming the sale during the completion of a foreclosure auction that started on the Wailuku courthouse steps in May. Raffetto agreed to reopen bidding to allow two additional bidders to participate.
Miles Furutani, who was the receiver in the foreclosure, said now that the ownership is settled, “a lot of good things are going to happen in the near future.”
The ownership of the property will move from court receivership to a “new owner designated by the bidder,” according to a news release from the lender group. The new owner was not identified.
Furutani said the new owners will be able to command investment capital to expand the resort, which opened as the Maui Prince Hotel in 1986.
Former owners Morgan Stanley and local partners Everett Dowling and Trinity Investments had big plans for Makena before the national real estate market cratered. They paid about $570 million in 2007 to acquire the resort, hotel and golf courses from Seibu Group, which had its own financial problems in Japan. Then they invested at least another $100 million in plans and projects before their investment group failed to keep up the payments on a $192.5 million first mortgage last year.
Among the plans then was to replace the 310-room Maui Prince Hotel. During the receivership, the hotel has been managed by Benchmark as the Makena Beach & Golf Resort.
In May, at a brief auction on the courthouse steps, Wells Fargo, acting as agent for the creditors, bid $55 million, using its credits as tender. Only one other bidder, who did not identify himself, made a bid. By that time, the junior lenders had already been wiped out.
In Hawaii, foreclosure auctions have to be submitted to the court for confirmation. If the property is desirable, that is usually where the real action occurs, and that is what happened Tuesday.
The purchase includes the resort’s golf courses and county authorizations for up to 1,100 residences. The authorizations come along with obligations to build up to 400 units of affordable housing and many other conditions.
During the foreclosure period, which lasted about 10 months, the creditors authorized considerable expenditures to keep the hotel operating and to expand the resort. A Makena Ranch guided horseback ride was one, as well as reopening a restaurant and other improvements.
Furutani said the employees had been magnificent during the period of uncertainty. “The employee family has been the biggest asset,” he said.
Willie Kennison, Maui director of the International Warehouse and Longshore Union, which represents the employees, said the auction sale was a step in the right direction.
“We feel very positive about this outcome,” he said. “We have talked to representatives of new ownership, and we know they are really committed to Makena and to Maui. That is good news for employees and good news for our island guests.”
Furutani said the resort’s hotel occupancy is double what it was a year ago.
“The resort is in better condition, and morale is high since we were able to rehire most of the employees who had been let go when the prior owner went into default on its debts,” he said.
He acknowledged that the economy is still down but predicted that the infusion of capital to remake the resort will “also be for the benefit of Maui County.”
* Harry Eagar can be reached at firstname.lastname@example.org.