Developers who have been working over the past seven years to revitalize the shuttered Coco Palms Resort on Kauai are putting the property on the market.
Coco Palms, featured in the 1961 Elvis Presley movie “Blue Hawaii,” has been closed since Hurricane Iniki slammed into Kauai in 1992, causing extensive damage to the property.
The restoration project ran into opposition from
Native Hawaiians who claimed ownership of the land. A court case filed by the Native Hawaiians was dismissed in June, and an appeal was dismissed in
November.
Tyler Greene, one of the investment partners of Coco Palms Hui LLC, said delays of nearly two years resulted in millions of dollars in additional project costs.
“Coco Palms Hui understands that the County of Kauai would like to expedite the renovation of this iconic property in order to officially close the chapter on Iniki and also acknowledges that due to the delays that the current lender has a high sense of urgency to retire their loan on the property,” Greene said in an emailed statement Tuesday.
“In support of the County’s wishes and need to pay the lender, Coco Palms Hui has decided to put the property on the market,” Greene said.
Utah-based development and asset management firm Stillwater Equity Partners, which was brought in to help manage the project, said Coco Palms Hui defaulted on a loan from
Private Capital Group, a Utah-based private loan servicer, and failed to present a plan or financing commitments by the end of 2018.
Aaron Gerszewski, asset management director of Stillwater Equity Partners, said most of the capital used by Greene and Waters to complete the first phase of demolition and remediation work was provided through a loan by Private Capital Group. The loan also covered the initial site cleanup, acquisition of permits and a management agreement with Hyatt to manage the hotel.
In an emailed statement Gerszewski said the developers intended to pay off the loan by obtaining a construction loan but were unsuccessful and defaulted on the loan in 2017.
To avoid litigation that could potentially lead to more delays on the project, Private Capital Group arranged a plan with Greene and Waters that included appointing Stillwater to manage Coco Palms Hui in exchange for granting Greene and
Waters a final attempt at formalizing a plan and securing capital commitments.
Greene contended the loan is past its original term and that since 2017 the lender has been accruing interest “due to extenuating circumstances caused by the squatters.”
For months in 2017 and 2018, dozens of people —
including organizers Noa Mau-Espirito, who says he is a descendant of the last ruler of Kauai, King Kaumualii, and Kamu “Charles” Hepa — occupied the land. In February 2018 state
sheriffs’ deputies evicted the protesters.
Greene did not provide the amount of the debt owed to the lender.
The Garden Island newspaper reported Tuesday that developers defaulted on an $11.2 million loan used to purchase the property five years ago.
Though Private Capital Group has yet to decide whether to initiate foreclosure action against Coco Palms Hui, Stillwater will continue to market the hotel to potential buyers domestically and internationally.
The equity firm “is currently seeking a buyer or partner that can contribute the capital and resources needed to make Coco Palms an iconic hotel as it once was,” Gerszewski said.
If a buyer is not solidified in the coming months, the firm plans to explore other alternatives for the property that would benefit the community.
Coco Palms Hui, owned by Greene and Waters, acquired the Coco Palms property in 2016 from its previous owner, Prudential Insurance’s PR II LLC.
Several developers have attempted to rebuild the resort over the years, but plans faltered. Greene and Waters were the latest developers to purchase the property. The $150-$175 million project was slated to have 350 rooms, retail space and a cultural center.
Honolulu hotel executive Lyle Guslander opened Coco Palms in 1953. Under the vision of his wife, Grace Buscher Guslander, the
24-room lodge expanded and transformed into a resort of more than 400 rooms, suites and bungalows. Celebrities including Bing Crosby, Frank Sinatra and Elvis Presley were guests of the resort.
