Savio to buy last tower of Queen Emma complex

By Andrew Gomes
Advertiser Staff Writer

In a rebound from bankruptcy, local residential developer Peter Savio has acquired a contract to buy the Prince Tower at Queen Emma Gardens from Pacific Century Trust for about $18 million.

Peter Savio is rebuilding his business from bankruptcy.

The 235-unit Prince Tower is one of four buildings Savio said he is buying through Hawaiian Island Development Co. Inc., a business he formed in April after initiating liquidation of his Savio Development Co. When Savio Development filed for bankruptcy in January 2000, it listed $46 million in assets and $51 million in debts.

Savio said he has purchase contracts for three Waikiki hotel and apartment buildings with a combined 327 units that he plans to convert and sell as fee-simple condos in September or October.

"I can't say much more than that," Savio said, declining yesterday to identify the properties. He said he expects Prince Tower units to be offered for resale in October or November.

Savio, who in February moved to protect his personal assets from creditors of Savio Development by filing for personal Chapter 11 bankruptcy, listing $7 million in assets and $33 million in debts, said the bankruptcies have not hurt his ability to rebuild his real estate business.

All four properties Savio is buying are being purchased with local and Mainland partners and financed by Mainland lenders, he said, declining to identify his partners.

For Prince Tower, Savio said he applied for financing a week ago and has received positive response.

"People are coming to us to finance projects," he said. "We're coming back bigger and better."

The developer, who since 1981 has bought about 3,500 leasehold apartment rental units and resold them as fee-simple condos to individual buyers at below-market prices, got into financial trouble in the early- to mid-1990s when 100 to 150 loans the company made to help buyers purchase units went bad.

Defaults by customers, who could not sell their units because of depressed real estate prices, led Savio Development to default on loans with its lenders.

This time around, Savio said he will not be making down-payment loans, second mortgages and bill-consolidation loans to customers. But at the buildings he's buying, he will help renters purchase their units by giving them plenty of time to raise money.

"With interest rates down to 6 1/2 to 7 percent, and 95 percent financing, you can't go wrong," he said. "With their security deposit and a few thousand dollars cash. they should be able to do it. This is going to give people a chance to become homeowners."

Savio expects 50 percent to 60 percent of the 235 renters at Prince Tower to buy their units. Prices will range roughly from $85,000 to $90,000 for studios; $120,000 to $140,000 for one-bedroom units; and around $185,000 for two-bedroom units.

At Queen Emma Gardens' King and Queen towers, which Savio bought and began converting three years ago, about 100 of 350 units are still available for sale, according to Savio.

Savio announced the original purchase of all three Queen Emma Gardens towers in 1996, but permitting and title holdups delayed the deal. In 1998, he completed the purchase of the King and Queen towers for about $40 million, retaining a two-year option to buy the Prince Tower. That option expired last year.

Pacific Century Trust, which administers the assets of Prince Tower owner Robert E. Black Memorial Trust, put the building up for sale about 60 days ago, according to Savio.

Pacific Century Trust officials did not return a call requesting comment yesterday. Savio said his offer was one of about 10.

In another move to leave behind his past financial troubles, Savio on Monday filed Chapter 7 bankruptcy for his holding company Savio Inc., which includes real estate subsidiary Savio Realty Ltd. Better Homes & Gardens.

Savio Inc. is one of Hawai'i's largest companies on the basis of revenues, which totaled $135 million last year.

According to the bankruptcy filing, Savio Inc. assets are estimated between $100,000 and $500,000 while estimated debts are between $1 million and $10 million.

Among the largest Savio Inc. creditors are Bank of Hawaii, which along with Pacific Century Trust is a unit of Pacific Century Financial Corp. Other creditors include American Savings Bank, Central Pacific Bank, Beale Bank of Dallas, City Bank and First Hawaiian Bank.

Savio said he had to take the company into Chapter 7 liquidation because one of his Savio Development creditors, Central Pacific, had a claim tied to Savio Inc. He said although Savio Realty is operating and solvent, he plans to eventually shift his nondevelopment real estate activities to Hawaiian Island Homes, which he formed a couple months ago.

"I'm a free man," he said. "We're just going to move on."

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.