By Andrew Gomes
Advertiser Staff Writer
Three Island golf courses with ownership ties to Japan are being put up for sale in an offering that could yield almost $100 million.
The owners of Hawaii Country Club on O‘ahu, Pukalani Country Club on Maui and Kiahuna Golf Club on Kaua‘i all recently decided to divest of the properties in the face of what may be a growing interest among course buyers.
The sport, according to a Hawai‘i Visitors & Convention Bureau report last year, generates more income than any other single recreational or entertainment activity in the state. In 1997, golf made an estimated $1 billion indirect economic impact on the local economy and still has "huge potential," the report said.
Still, the golf business in Hawai‘i has been financially challenged in recent years, as a glut of course development in the late ’80s and early ’90s reduced the number of rounds played per course after sales of private memberships to Japanese visitors fizzled.
Some analysts believe the glut of course offerings has yet to be absorbed, citing struggling courses and last year’s closing of the Grand Waikapu Resort & Spa course. But others believe in a strengthening market that has investors buying courses, including the Silversword Golf Course on Maui and Makaha Golf Course on O‘ahu, both of which were purchased last year.
"People are looking to buy," said Stephen Drake, president of 1 Drake Properties, a local real estate firm that is once again dabbling in the golf course brokerage business. "Demand is definitely on the upswing."
Douglas Pothul, a senior vice president at Colliers handling the three-course sale, said the courses’ combined transaction value is probably $80 million to $90 million. All three courses are being marketed individually, but without asking prices.
Hawaii Country Club, developed in 1958, claims to be the oldest public course on O‘ahu. The Kunia course is owned by a partnership of local investors and majority owner Sumitomo Realty and Development Co.
Osaka-based Sumitomo purchased a 51 percent stake in Hawaii Country Club owner Ekahanui Inc. in 1972. In the past two years, the bank has reduced holdings in the parent of Central Pacific Bank to 5.5 percent from as much as 14 percent. The bank also reduced its stake in Pebble Beach Co., owner of four California golf courses and two luxury hotels in 1999.
The Pukalani and Kiahuna courses, on the slopes of Maui’s Haleakala and Kaua‘i’s south shore respectively, are private courses open for public play. Sports Shinko, a Tokyo-based company that operates mainly golf courses in Japan, acquired the Hawai‘i courses in the late ’80s.
The company also owns the 314-room Queen Kapiolani Hotel, 450-room Ocean Resort Hotel Waikiki, 59-unit Diamond Head Beach Hotel and Mililani Golf Course. On the Mainland, it owns La Costa Resort & Spa in Carlsbad, Calif., and Grenelefe Golf & Tennis Resort in Orlando, Fla.
Sports Shinko is waiting to close a sale of the Diamond Head Beach to local developer Peter Savio for just under $5.5 million. Sports Shinko said it plans to use proceeds to refurbish the Queen Kapiolani and Ocean Resort. A similar reinvestment strategy is planned for golf course proceeds.
"In order to maintain their core properties they are getting rid of some of their noncore properties," Pothul said. "They will continue to have a presence in Hawai‘i."
Pothul said Sports Shinko has no plans to sell the Queen Kapiolani or Mililani golf course. Its plan for the Ocean Resort is undetermined, he added.
Andrew Gomes can be reached at 525-8065, or by e-mail at: agomes@honoluluadvertiser.com
Correction: The majority owner of Hawaii Country Club is Sumitomo Realty & Development Co. A previous version of this story misidentified the owner.
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