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The Ritz-Carlton, Kapalua sold to partnership

County property tax assessment for 49-acre property was $40.7 million

The Ritz-Carlton, Kapalua has been sold for the second time in about two years to a partnership that includes Trinity Investments and Area Property Partners, which also are part of a consortium that owns the shuttered Makena Beach & Golf Resort.

The joint venture that purchased The Ritz-Carlton, Kapalua includes Trinity; Ares Management, which purchased Area Property Partners in 2013; and SMW Hospitality, which includes affiliates Square Mile Capital Management and Wafra Investment Advisory Group, the real estate group announced Monday.

The resort was acquired from a partnership including Woodridge Capital Partners and Colony Capital.

A query to Ares officials about the terms and price of the sale was not returned Monday. The county property tax assessment for the 49-acre, five-diamond AAA resort was $40.7 million.

“This acquisition of The Ritz-Carlton, Kapalua represents a significant opportunity to invest in one of Hawaii’s most highly acclaimed resorts, and it fits squarely in our opportunistic strategy that focuses on development and redevelopment, with planned upgrades to further improve the guest experience for both leisure and group customers,” said Andrew Holm, managing director in the Ares Real Estate Group.

The group plans to renovate the hotel’s common areas and 297 guest rooms, according to a news release. The sale also includes 107 one- and two-bedroom condos in the Residences.

“This project continues our long history of partnering with Trinity, which Ares has worked with in Hawaiian hospitality over 20 years on more than $1.2 billion in real estate investments, as well as our long-standing relationship with The Ritz Carlton’s parent company, Marriott,” said Holm.

Trinity, which is headquartered in Honolulu, is part of ATC Makena Holdings, which owns the 310-room Makena Beach & Golf Resort that closed in July. The ownership group also includes Honolulu’s Stanford Carr Development.

ATC Makena Holdings is in the process of turning the Makena resort into a resort community that includes a 76-room hotel, multifamily condominium units, spa hales and nine beach cottages, according to documents filed with the Maui Planning Commission.

“We are excited to partner with Ares and SMW Hospitality to acquire one of Hawaii’s iconic luxury hotels,” said Sean Hehir, president and CEO of Trinity Investments. “Having invested in hotel properties across Hawaii since our inception, we are intimately familiar with the market’s nuances and demand drivers. This transaction represents a unique opportunity to own a marquee hotel that will benefit greatly from our ownership experience and proven operating platform.”

Trinity’s past investments on Maui include the Kea Lani Resort in Wailea, Embassy Suites Kaanapali and Wailea 670, which is currently called Honua’ula, according to its website.

“The Ritz-Carlton is one of Maui’s iconic properties, and it’s a welcome addition to our hotel investment portfolio,” said Managing Director Nolan Hecht of Square Mile Capital Management on behalf of SMW Hospitality. “It also represents our entry into Hawaii in spectacular fashion, alongside two great partners in Ares Management and Trinity Investments.”

Square Mile Capital Management, based in New York, is a real estate finance and investment management firm. Ares is a publicly traded asset manager with $97 billion of assets at the end of the third quarter, according to the news release.

The Ritz-Carlton, Kapalua amenities include a 17,500-square-foot spa; a three-tiered swimming pool; a fitness center; a 4,844-square-foot retail arcade; priority access to two championship golf courses, The Bay Course and The Plantation Course; and instruction at Kapalua Golf Academy, according to the news release.

The property also features 32,000 square feet of meeting space in addition to restaurants, including The Banyan Tree, Kai Sushi, The Beach House, Alaloa Lounge, The Pool Bar & Cafe, The Terrace and Aina Gourmet Market, according to the news release.

The resort was built in 1992 by Maui Land & Pineapple Co., which moved the resort footprint following the discovery of ancient burials and protests by Native Hawaiians. ML&P sold the resort to a joint venture, including Goldman Sachs Group and Gencom Group in 2006.

The resort was closed for part of 2007 for major renovations that included turning some of the rooms into condominiums. It reopened as the dark economic clouds of the Great Recession began. The stock market collapsed, and Gencom defaulted on its Lehman loan with the debt reaching $300 million, according to published reports. Lenders foreclosed in March 2011 with $268 million owed.

In July 2011, Lehman, bidding with the debt it held against Gencom, obtained ownership of the resort with a $95 million bid. Woodridge Capital Partners and Colony Capital purchased the resort in February 2014 for $142 million, according to a Colliers International report.

* Lee Imada can be reached at leeimada@mauinews.com.