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The Maui News
Saturday, February 10, 2007 10:04 AM
Makena Resort sold for $575 million
By HARRY EAGAR, Staff Writer
MAKENA - Seibu Group is selling Makena Resort, including the Maui Prince Hotel, to a hui of veteran local developers for $575 million.
The local members are Everett Dowling of Dowling Co. and Trinity Investments, which is led by Honolulu lawyer Jon Miho and Charles "Chuck" Sweeney, who headed partnerships that built the Embassy Suites at Kaanapali and the Kea Lani Hotel at Wailea.
Miho is the son of a Maui couple who operated a tiny hotel, the Miho Hotel, in Kahului before World War II.
Dowling and Trinity are teaming with giant Morgan Stanley Real Estate, which has steered more than $100 billion in real estate investments since 1991.
Dowling said Friday that the first order of business once the deal is closed will be to pursue the existing rezoning application for Makena Resort - a request to revise the resort master plan that has been stalled in the County Council Planning Committee.
Dowling also is developing the 14-acre Keaka LLC condominium project adjacent to Maluaka Beach and the Maui Prince, and owns land at Palauea, which is surrounded by Makena Resort. He says there will be synergistic benefits from controlling both.
He promised that future development would be "green," a theme of his
Maui projects, under the slogan "Building in Balance."
Donn Takahashi, the president of Prince Resorts Hawaii, said, "Of all the people and companies who could have been the purchasers, this is an excellent fit."
Takahashi has been head of the Maui Prince three times in the past 15 years, also acquiring additional responsibilities from Prince Resorts Hawaii. He will remain an employee of Prince.
He said Friday that he came back last year when Prince announced it wanted to sell "to oversee a smooth transition, and make sure that the managers and employees are protected."
He said 78 percent of the staff has been at the hotel for three years or longer and more than half for more than five years.
"It is really these fine folks who are the assets for the resort. That can’t be measured in dollars, but it can be measured in value, and I know the new owners appreciate that."
When Seibu Group, which owns the Prince chain, announced in September it wanted to sell, employees represented by the ILWU were worried. The announcement of the transaction says the new owners will assume the union contract and retain all union employees.
Willie Kennison, the division director of Local 142, said Friday that he had visited the hotel to begin to "know what direction they want to take it in."
Although they have embraced the contract, "We still want to know what their plans are."
The rezoning Makena Resort has been seeking, without making much progress over the past two years, would allow an estimated 3,300 units. However, the company said its 20-year plan would include only 1,100 luxury homes, condominiums, apartments and a time-share hotel.
Water is always a sensitive issue for Makena Resort, at the far end of the pipeline from Iao Valley.
Dowling said that "two or three things are going to happen" in regard to water.
First, using green building concepts, demand will be lessened. Next, with the new wastewater treatment plant that is included in the build-out, there will be more treated effluent available for irrigation, opening the prospect of taking all the resort's irrigation off potable sources.
And that, in turn, opens the prospect of filtering water from brackish wells to improve the quality.
Makena Resort owns a lot of baked rock - all of it needing water to be used for business. Besides the 310-room hotel, the property includes two 18-hole golf courses and about 1,300 acres of unused land.
David Cole, chairman of Maui Land & Pineapple Co., was one of a number of serious shoppers for the property. Interviewed by telephone from Brazil, where he was investigating an ethanol project Friday, he said Dowling "has a real deep understanding" of the property, which he thinks may have given him "a slight edge" over other bidders.
Interest reportedly was high, despite the price. Although $575 million is near the construction cost of the Grand Wailea Resort, Hotel & Spa, no Maui hotel has ever resold for anywhere near that much - not even the Grand Wailea.
However, no Maui hotel has ever sold with as much potentially developable land attached as the Prince.
"From the outset of the sales process, there was strong and steady interest in the property," Takahashi said. "The $575 million purchase price reflects the location and potential of Makena and has met our expectations for the transaction."
"We are excited to become the entrusted keeper of this extraordinary property," Dowling said. "We intend to bring our company’s deep commitment to environmentally and culturally sensitive development to every aspect of Makena Resort."
Sweeney, who seldom gives interviews, is a legend in hotel development with two decades of contact with Maui.
He invented the all-suites concept and with partner Robert Woolley built Maui's first all-suites hotel in 1989.
It was the height of the Japanese interest in Maui, and three days after opening, Woolley/Sweeney Hotel No. 13 was sold for a profit of $60 million.
Sweeney contributed $250,000 to Maui Community College to begin the Visitor Industry Training and Education Center (VITEC), with a hint to other hotel owners to add to the fund - a hint that was not taken.
He then developed the Kea Lani, which opened after the Japanese had lost their enthusiasm for Hawaii hotels. Embassy Suites at Honokowai was not a success. It went through two owners, fell into bankruptcy and was turned into a time share.
Kea Lani was more successful and became part of the Fairmont chain.
Dowling has been developing on Maui nearly as long as Sweeney and said he has been friends with Miho for 23 years.
Miho and Sweeney founded Trinity in 1997 to take advantage of what they regarded as undervalued Hawaii hotels.
Trinity now has offices in Honolulu, Mexico, Tokyo and New York and interests in hotels from Austria to Hawaii.
Dowling Company's Maui projects include Kamalii Elementary, Maui's first privately-developed public school; four projects for the Department of Hawaiian Homelands; One Palaue'a Bay (neighbor to the Maui Prince); Kulamalu in Pukalani, which includes the Maui Campus of the Kamehameha Schools; and Maluaka in Makena.
Trinity owns and operates the Kahala Hotel on Oahu.
The Seibu Group and Prince Hotels will continue to own and operate the Mauna Kea Resort on the Big Island, which includes the earthquake-damaged Mauna Kea Beach Hotel and the Hapuna Beach Prince Hotel. Seibu also will keep its Hawaii Prince Hotel Waikiki and its affiliated golf club.
The Maui Prince opened in 1986 and along with the Kaanapali Beach Hotel was the only large resort on the island that had not changed hands during the 1990s.
The sale is scheduled to close on March 27.
Harry Eagar can be reached at heagar@mauinews.com.
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