Naniloa sold


By TOM CALLIS

Tribune-Herald staff writer

The buyers of the Naniloa Volcanoes Resort plan to use a marine theme — with art provided by world-renowned artist, Robert Wyland — to transform the beleaguered hotel on Hilo’s Banyan Drive.

Tower Development Inc. of Honolulu and Wyland Hilo Hotel LLC together submitted the winning bid of $5.2 million Tuesday in U.S. Bankruptcy Court in Honolulu, according to David Farmer, Naniloa’s bankruptcy trustee.

Assuming there isn’t an appeal, sale of the 383-room hotel and its nine-hole golf course would be finalized within 14 days, Farmer said.

“For Hilo, this is a good day,” he said.

The buyers could not be immediately reached for comment. But documents filed in bankruptcy court show they plan to invest substantially in the property with renovations and art work and decor by the environmentally-conscious artist.

The marine theme would replicate the same style used at the former Wyland Waikiki Hotel, renamed the Courtyard by Marriott Waikiki Beach in 2009.

Referring to the current operation as simply the “disaster,” Tower Development President Edward Bushor said in a letter to bankruptcy court Judge Robert Faris that the buyers plan to embark on a $20 million renovation project to create a 3.5- to 4-star “Wyland Hilo Hotel.”

“We appreciate the opportunity to do the right thing and convert the Naniloa into a Wyland Hilo Hotel and upgrade the entire area for the benefit of Hilo, DLNR (state Department of Land and Natural Resources) and this great state of Hawaii,” the letter dated Saturday said.

In the letter, Tower Development cites other developments it has orchestrated, including the Airport Center in Honolulu, Wyland Waikiki Hotel, the Aloha Tower in Honolulu and the Dole Cannery at Iwilei.

Additionally, the buyers have committed to providing $1.5 million to cover Naniloa’s delinquent lease payments to DLNR and taxes to the state and Hawaii County.

Another $250,000 would be given to unsecured creditors. The buyers also said they plan to resolve about two dozen building code violations that the county discovered in inspections earlier this year.

In an email, Hawaii Island Chamber of Commerce President-Elect Chuck Erskine said the business organization hopes that the sale will result in the hotel being improved.

“It is our hope that the new owners will invest the necessary resources to restoring the property’s infrastructure and will be able to bring significant numbers of overnight visitors back to East Hawaii,” he said.

The buyers had initially proposed $4 million for the purchase but the price was pushed up due to a bidding war Tuesday with two other interested buyers, Pagoda Hotel and Mountain Rock LLC.

Pagoda Hotel stopped at $5 million and Mountain Rock got out at $4.2 million, Farmer said.

Farmer said Pagoda Hotel had the best bid since it offered $500,000 to unsecured creditors in addition to the $1.5 million for covering the defaults.

But the hotel had sought a longer closing period of 45 days, which Faris considered to be too long, he said.

Lower bids had been submitted by Ramco Properties LLC ($3.7 million) and America Asia Travel Center Inc. ($3.5 million).

Ramco Properties is owned by the RAM Corporation, which is the majority owner of the Hilo Hawaiian Hotel. Helen Koo, whose legal name is Yee Shum Severson, owns both AATC and Hilo’s Nani Mau Gardens.

The sale would end the ownership of Hawaii Outdoor Tours Inc., which has been harshly criticized for Naniloa’s condition.

Currently, the kitchen is closed and about 100 rooms remain off limits due to incomplete renovations.

The company, headed by Ken Fujiyama, bought the hotel in 2006 for $6.1 million. Fujiyama also previously owned the Nani Mau Gardens.

Fujiyama made a last-ditch effort to maintain control of the hotel by offering $14 million through the sale of real estate from HPAC, LLC. HPAC is an affiliated company of Ken Direction Corporation, of which Fujiyama is CEO.

Faris rejected the proposal, which was also opposed by the hotel’s mortgage-holder, First Citizens Bank & Trust Co.

Naniloa went into bankruptcy on Nov. 20, 2012, about three months after First Citizens initiated foreclosure for the default of a $10 million loan.

In addition to the hotel, the buyers would also receive the $500,000 a year DLNR lease. The lease will expire in about 58 years.

Email Tom Callis at tcallis@hawaiitribune-herald.com.

 

Rules for posting comments