Employees’ Retirement System to sell Maui golf courses for $ 28 million

Hawaii‘s largest retirement fund sold two Maui golf courses after 18 years of ownership due to a crooked home loan.

State Employees’ Retirement System managers sold the Royal Kaanapali and Kaanapali Kai golf courses to Host Hotels & Resorts, which operates the oceanfront Hyatt Regency Maui hotel on one of the 36 holes.

The $ 28 million sale closed last month, offsetting a portion of a long-standing loss ERS suffered on a bad debt secured by the golf course property.

Broadshore Capital Partners, an investment advisory firm that ERS hired to manage its golf course assets in 2015, announced the sale on Monday.

The deal follows a decision last year by managers of the roughly $ 20 billion retirement fund to abandon a plan to get higher returns on the golf course asset by adding a hotel, condominium, and other amenities to the 305 acre property by redesigning golf operations to include 27 holes.

Emmit Kane, chairman of the ERS board of trustees, said in a statement that the retirement fund, which provides benefits for more than 140,000 employees and public service beneficiaries in the states and counties of Hawaii, was happy to host the golf courses.

Nathan Tyrrell, chief investment officer at Host, said in a statement that the company expects short-term potential to benefit from the acquisition through creative programs and experiences related to its recently renovated hotel property.

“The host is excited to expand our investment in the Kaanapali Beach Resort area,” he said.

ERS acquired the golf courses through foreclosure in 2003, three years after the Kaanapali Resort’s original developer, Amfac Hawaii, for $ 60 million on a $ 66 million loan that ERS granted the company in 1991 , was in default.

To improve the property, ERS spent $ 13 million between 2005 and 2007 to renovate the golf courses, which include driving ranges and a clubhouse with a Roy’s restaurant.

In 2017, after ERS tried unsuccessfully to sell the property at an acceptable price, ERS hired a subsidiary of California real estate company Lowe Enterprises to create a conceptual redevelopment plan that included 156 to 256 condos, a 136-room hotel, 80,000 square feet of retail space, a new clubhouse with restaurant and pub, a family restaurant, a special events area, a 4.5 acre park and a beach club by the sea with a unique restaurant.

ERS abandoned its estimated $ 373 million recovery plan last year due to the impact on the Hawaiian economy and tourism industry caused by the coronavirus pandemic.

Originally built in the late 1960s and early 1970s, the golf courses are open and continue to be managed by national golf course operator Indigo Golf Partners, a company formerly known as Billy Casper Golf Management and recently acquired by Troon.