Due to an increase of new and revitalized construction of apartment buildings across the mainland, they are at risk of oversaturating the market with additional apartment units. Hawaii, on the other hand, does not currently have new construction of rental units. This translates to a continued pressure to increase rental rates. To read more about the trends, please download the articles below.
Fresh Off The Press!
If you're interested in a copy of Colliers International's National Q2 2012 Retail Market Report, please feel free to contact me.
In this report, you will find:
- National Vacancy Rates
- Asking Rent PSF
- Highest and Lowest Retailers
- Shopping Center Market Statistics
- and more!
Process may resolve resort’s ownership by end of the year
August 29, 2012
By NANEA KALANI – Staff Writer (email@example.com) , The Maui News
The Grand Wailea could be under new ownership before the end of the year as the hotel's owners seek to auction off assets and emerge from bankruptcy protection.
A Singaporean government investment fund has agreed to pay $1.5 billion to buy the Grand Wailea and three other U.S. luxury resorts that owners Paulson & Co. and Winthrop Realty Trust foreclosed on last year.
The offer by the Government of Singapore Investment Corp., a major creditor to the properties, will trigger an auction of the resorts in October, according to documents filed in bankruptcy court in New York.
The bidding entity is a sovereign wealth fund that manages Singapore's foreign-exchange reserves. The fund manages an estimated $300 billion in diversified assets in more than 40 countries.
A Sept. 10 hearing is set in Manhattan for a bankruptcy judge to approve sales procedures and consider the bid. An auction will determine whether another buyer will pay more for the portfolio of resorts.
In addition to the 780-room Grand Wailea, the other properties in the deal are the La Quinta Resort & Club and the PGA West golf course in La Quinta, Calif.; the Claremont Resort & Spa in Berkeley, Calif.; and the Arizona Biltmore Resort & Spa in Phoenix.
The hotels – all of which are managed under Hilton's luxury Waldorf Astoria brand, except for the Berkeley property – have been operating under bankruptcy protection since February 2011.
Local management at the Grand Wailea sees the new ownership opportunity as a positive.
"We think it's a good thing," said Matt Bailey, managing director for the Grand Wailea. "I don't want to minimize the significance of the bankruptcy, but we have tried to shelter our guests from it. It's business as usual."
He said the sale would help alleviate uncertainty for the hotel's approximately 1,500 employees.
"The auction, scheduled for October, will bring a close to our owner's bankruptcy case. While the Grand Wailea has been largely unscathed by the events of the past year, this ends any uncertainty surrounding ownership of the three Waldorf properties in question," Bailey said. "Hilton's management contract runs for the next 24 years at Grand Wailea, (and) we plan to continue offering a singular Waldorf Astoria experience for many years to come."
The Grand Wailea had last changed hands in 2007, at the peak of the real estate boom, when it was acquired by a subsidiary of Morgan Stanley.
Paulson & Co., a New York-based hedge fund, and Winthrop Realty Trust, a publicly traded real estate investment trust, took over the Grand Wailea and several other resorts by foreclosing on the previous owner.
Soon after, they put the Grand Wailea and four other resorts into bankruptcy to prevent foreclosure of $1 billion in mortgages and $525 million in maturing mezzanine debt held by the Singaporean investment fund, MetLife and others.
The fifth property – the Doral Golf Resort & Spa in Miami – was sold to real estate investor Donald Trump earlier this year for $150 million.
Paulson and Winthrop had previously agreed to make "periodic payments" to the Singaporean investment fund and MetLife with the goal of paying them off in full by Saturday, or the resort properties would be put up for sale.
A payment due Aug. 1 was not paid, according to bankruptcy documents.
"As a result, the debtors informed the court and their stakeholders that they would run an auction process," an Aug. 17 court filing said. "The debtors continued to engage potential purchasers and sponsors, including (the Government of Singapore Investment Corp.), to secure a backstop offer to purchase the properties and support a plan of reorganization."
An agreement was reached Aug. 16 on the Singaporean fund's $1.5 billion offer, which would include $1.12 billion in cash and paying off $360 million in debt.
Paulson initially was reportedly looking to take part in the auction in an effort to hang onto the properties, according to the Wall Street Journal.
The parties have agreed on a $28 million so-called breakup fee for the Singapore fund if another bidder is chosen at auction, according to court documents.
Colliers Investment Services conducted a survey at the International Council of Shopping Centers' annual real estate convention. Though this was based on a national crowd, I believe they are also representative of trends in Hawaii investment properties:
- 86% of respondents believe 2012 will fare BETTER than 2011
- 82% of buyers are looking for VALUE-ADD properties
- 68% of transactions are closing for ALL CASH
- 71% of financed transactions are occurring through LOCAL banks
A recent investment survey by Korpacz suggests that 2010 was a great year for “core” markets and 24-hour major cities around the globe for commercial real estate investment. We have seen a notable increase in demand for class A properties here in Hawaii but sluggish demand for class B and C properties. With loan rates still low and investors having a strong appetite for “bricks and mortar,” over other types of investments many investors are now heading into secondary or smaller markets. In 2011 investors will start to look at Class B properties and we predict those prices will begin to lift too.
Hawaii has seen a decent market in 2010 for commercial real estate sales and is expected to benefit greatly with more money and more investors, again, looking at the Hawaiian islands for commercial real estate investments.
While I was in New York City for a conference, I was able to visit clients and customers to take their temperature on our Hawaii real estate market place. I did get somewhat of a consensus from the major players. The first half of 2009 was spent taking care of their problems. In only one case did that result in a property potentially going back to the lender. Many of the loans on the larger Hawaii properties were renegotiated and extended during the first half of 2009. It was clear that these entities are not going to throw good money after bad. However, with the extension of the loans, they seem to be willing to ride out the storm and plan to get back to similar values in 5-8 years.
Hawaii Commercial Real Estate
Another similar circumstance amongst these owners is that they are ready to dive back in and invest. Several have funds left over from pools that they raised publicly in 2006 and 2007, which have not yet been spent. Others have new money that they have raised targeting “distressed assets”. They are studying the problem assets in Hawaii, primarily hotels, and already deciding amongst themselves which ones are they interested in and which ones they won’t waste their time on. Wall Street still has a strong appetite for Hawaii real estate.
Today it was reported that three new restaurants will go under construction and open for business in the next six months in the Honolulu area. The restaurants are as follows: Paparazzi, Ka Restaurant – Pacific Rim Cuisine, and Pablo McGinty’s, a Mexican/Irish restaurant and bar. All three restaurant locations have been closed by other operators within the past year. Located at General Growth Properties Ward Centre, the restaurants are all large space, second floor locations. It’s great to see activity where there were recently dark, papered up windows.
Our California offices also reported an uptick in restaurant operators coming to town, looking for new locations, and willing to invest new capital. This willingness to spend new capital, hopefully, will be an early sign of an uptick in activity in the commercial real estate markets in both locations.