DeBartolo Grabs 132-Room Aqua Waikiki Pearl Hotel in Hawaii
- Aug 05, 2013
DeBartolo Development L.L.C. just made its first tangible foray into the Hawaii hotel market with the acquisition of Aqua Waikiki Pearl, a 132-room hotel in the heart of Oahu, in Honolulu. DeBartolo purchased the 10-story hotel tower, sited just a block from Waikiki Beach, from Ramsfield Hospitality Finance in an off-market transaction.
It helps to have friends in the business. “We’ve got a lot of relationships that span from San Juan, Puerto Rico, to Hawaii, where we’ve been an acquirer for the last several years,” Edward Kobel, president & chief operating officer of DeBartolo, told Commercial Property Executive. “It’s been a remarkable time to buy properties of various kinds that would have been in various sorts of distress.” Various kinds of properties include apartments and anchored retail, and now, limited-service hotels.
Aqua Waikiki Pearl, once known as the Honolulu Prince Hotel, was developed in 1960 and sits on a half-acre parcel under a long-term ground lease with the Queen Emma Trust. The aging property, which also features 5,300 square feet of retail space, received a 13-month makeover in 2008, emerging as a repositioned, rebranded lodging destination. “They’ve had an awful lot of progress on this asset and there’s still a little bit to be done, and we’re pretty excited about the prospects of it,” Kobel said.
DeBartolo is no stranger to Hawaii. The company has a long history with the state dating back to the 1940s and it is currently completing the entitlements process to break ground on the 1.4 million-square-foot, $350 million mixed-use Ka Makana Ali’i shopping center in Kapolei in 2014. DeBartolo could have waited for the completion of Ka Makana Ali’i, which will also feature hotels and office space, to make its debut in Hawaii’s hospitality market, but the company decided the timing was right with Aqua Waikiki Pearl.
“Our major reason for the acquisition is the fact that Waikiki is the strongest hotel market in the United States,” Kobel added. “It’s just a great place to invest in the hospitality sector and it’s something that we’re excited about for the next several years.”
And there’s good reason to be excited. The strength of the market, he added, is tourism, or rather, a significant increase in tourism. “Recently there’s been an awful lot of international visitors to Hawaii over the years and it’s a very large destination for Japanese weddings, but what’s really been the major driver of the market has been the Asian market from Seoul, Shanghai and Beijing,” said Kobel. “They just recently have begun direct flights from China and South Korea so what we’ve seen is an amazing amount of strength in the hospitality market, again from the Japanese but also the Chinese and the Koreans who didn’t have direct flights before, so that’s been a really big deal. It’s a paradigm shift and we’ve been watching that.”