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Ritz-Carlton sold again, this time to Blackstone

It’s same firm that bought Grand Wailea

The Ritz-Carlton, Kapalua, was sold for the second time in two years with Blackstone Group becoming its newest owner. Blackstone purchased the Grand Wailea earlier this year. • The Ritz-Carlton, Kapalua, photo

A joint venture that owns The Ritz-Carlton, Kapalua, announced Wednesday the sale of the 297-room hotel and condo complex to Blackstone Real Estate Partners, an affiliate of investment firm Blackstone Group, which purchased the Grand Wailea earlier this year.

The terms of the sale were not announced. This is the third sale of the property in four years after it emerged from a foreclosure proceeding.

The ownership group selling the resort includes Ares Management; SMW Hospitality, a joint venture of Square Mile Capital Management and Wafra; and Trinity Real Estate Investments.

Honolulu-based Trinity is part of a consortium that bought the shuttered Makena Beach & Golf Resort and is involved in its redevelopment plans and is in a partnership that acquired the leasehold interest in the Westin Maui Resort & Spa in April 2017.

“We believe the outcome of this transaction reflects the significant value we were able to create over the hold period,” said Sean Hehir, managing partner for Trinity Investments. “The deal is a perfect example of how we leverage our intimate local market knowledge and proven platform to generate compelling risk-adjusted returns on invested capital.”

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.

The Ares-SMW Hospitality-Trinity group purchased the resort in November 2016 for $210 million from the Woodridge Capital Partners-Colony Capital group, according to a Colliers International report.

The new owner of the resort, Blackstone, is a private equity firm with offices around the world and manages about $440 billion in assets, the company said on its website.

In April, a Blackstone company closed a deal to purchase the 776-room Grand Wailea for a reported $1.1 billion from GWR Wailea Property LLC.

Hotels are part of Blackstone’s portfolio. The firm acquired Hilton Worldwide Holdings and ran the company for about a decade before deciding to sell off its holdings in May. It acquired Motel 6 chain in 2012, the firm’s website said.

The Ares-SMW Hospitality-Trinity group spent about $30 million in improvements to rooms, the lobby and restaurants that were completed this year. The renovation project began in 2016 with the 107-unit Residences luxury condos, the resort said in February.

“The Ritz-Carlton, Kapalua, was acquired at a compelling basis and had a clear redevelopment plan that was a strong fit for our opportunistic investment strategy,” said Andrew Holm, a partner with the Ares Real Estate Group. “We are proud of the work we did with our partners to further improve what was already an iconic Maui property.”

Senior Managing Director Nolan Hecht of Square Mile Capital said that his firm, like Ares, “saw an opportunity to buy this particular property at a discount two years ago and reposition it very profitably” and to take advantage of an anticipated “rapid acceleration of tourism that would benefit the local hotel market.”

The Ritz-Carlton, Kapalua, is a AAA Five Diamond resort that sits on 49 acres in the Kapalua Resort.

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

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