Wyland Partnership Buys Naniloa Resort for $5.2 Million
A partnership between a California-based developer and marine artist Wyland today submitted the winning bid for the Naniloa Volcanoes Resort, the hotel’s bankruptcy trustee said.
David Farmer said Tower Development Inc. and Wyland Hilo Hotel LLC bid $5.2 million for the assets of the Banyan Drive resort. They prevailed in a bidding contest with Pagoda Hotel owner and Hilo native Peter Savio, who had bid $5 million.
The partnership also agreed to pay $1.5 million to pay state and county taxes and overdue state lease payments owed by the Naniloa, and an additional $250,000 for the hotel’s unsecured creditors.
Tower Development’s CEO is Ed Bushor, founder of eRealty Fund based in San Diego, Calif. Tower Development purchased Honolulu’s Aloha Tower in 2010 and sold it earlier this year to Hawaii Pacific University.
Wyland, who is famous for his large murals of whales and other marine scenes, also has an interest in The Wyland Waikiki hotel, which is now known as Courtyard by Marriott Waikiki Beach.
Farmer said the bid was accepted by the bankruptcy court and should be finalized 14 days after the sale motion is signed by the judge.
Pacific Business News reports that the Naniloa’s new owners plan to turn the resort into an “artistic boutique” hotel with an environmental theme, managed by Aqua Hospitality. It will also feature artwork by Wyland who Bushor intends to ask to create a marine-themed museum on the site.
Details about the plans for the Naniloa were not immediately available, but will be subject to approval by the state Board of Land and Natural Resources, which manages the state lease under the property.
Ken Fujiyama, owner of Hawaii Outdoor Tours Inc., which won the auction for the Naniloa’s lease in 2005, paying the former owners $6.1 million in the process, apparently wasn’t giving up ownership of the hotel easily.
Fujiyama has filed numerous motions critical of the bankruptcy process, including one filed today objecting to the proposed sale.
The latest motion, which was filed by Fujiyama “pro se,” which means without an attorney, claimed he had been treated unfairly by the court and by the bank holding the mortgage on the property and asked that the bidding be reopened with a minimum bid of $15 million.
Another motion filed Monday by an attorney for Ken Direction Corp., another Fujiyama company, claimed that an auction for the Naniloa held on Nov. 6 was tainted by irregularities involving two previous bidders.
According to Farmer, the allegations were moot, partly because neither of the previous bidders chose to take part in today’s final auction.
Fujiyama’s management of the resort has long been a source of contention with a variety of entities.
That includes the state, which has threatened to revoke the Naniloa lease because of Fujiyama’s failure to keep current with the $500,000 annual lease payments, to complete $5 million in renovations as scheduled, and to pay state hotel room and excise taxes.
He has also raised the ire of Mayor Billy Kenoi who has blasted Fujiyama for allowing the once-Hilo showcase resort to deteriorate.
No bid was entered by First-Citizens bank, which holds the Naniloa mortgage and last year foreclosed on the property.
Hawaii Outdoor Tours owes the bank $11 million on what was originally a $10 million loan.
First-Citizens acquired the Naniloa loan in 2008 after the original lender ran into financial difficulty during that year’s fiscal crisis.
It is not known how much First-Citizens paid for the loan, and under the terms of such acquisitions, the bank was likely guaranteed 80% of its investment by the Federal Deposit Insurance Corp.