California firm purchases Hobron hotel, Waikiki land
By Andrew Gomes
Advertiser Staff Writer
California-based investment firm Oaktree Capital Management LLC has purchased the 612-room Ohana Waikiki Hobron Hotel and about 10 adjacent pieces of property in a $20 million deal that gives the company a large redevelopment opportunity at the 'ewa end of Waikiki.
Oaktree bought the hotel and about 3 acres of property from Odakyu Hawaii Corp., a subsidiary of Japan-based Odakyu Electric Railway Co.
Representatives of Oaktree could not be reached yesterday for comment.
Barry Wallace, senior vice president of operations for Outrigger Hotels & Resorts, which operates Ohana hotels and had a short-term contract with Odakyu, said he has had preliminary conversations with Oaktree officials who indicated to him that they want Outrigger to continue managing the hotel.
"We're progressing as though the owner of the hotel has not changed," he said.
No major renovations are planned, as Odakyu has steadily maintained the hotel, Wallace added.
Local real estate analysts said the property is a prime redevelopment candidate, and noted that there have been several redevelopment ideas for the property, ranging from senior living to timeshare, since it was listed for sale in January.
Besides the hotel, the property covering just about the entire block bordered by Hobron Lane and Kaio'o Drive mauka of Discovery Bay contains 73 mostly low-rise multifamily apartments built in the 1940s and 1950s as well as vacant land.
"The present use is not the highest and best use," said Stephany Sofos of the Honolulu-based real estate consulting firm SL Sofos & Co. Ltd.
The purchase also positions Oaktree — which already owns seven other properties in the area, including the Waikiki Landmark and the land under the Wave Waikiki nightclub —to become a major player in the revitalization of Waikiki, according to Sofos.
"They could become very, very influential landlords in Waikiki," she said. "It's not prime real estate, but it could become prime real estate. They can do residential, they can do timeshare, they can do commercial ... they can do a lot with it."
Oaktree is a $20 billion investment firm formed in 1995 by seven former investment managers of Los Angeles-based Trust Company of the West. About a quarter of the company's investments are in the debt of distressed companies, which included a large stake in Liberty House that was sold to Macy's parent Federated Department Stores in July.
Oaktree also owns the Turtle Bay Resort, and is spending $35 million to renovate the 485-room oceanfront North Shore resort.
Odakyu acquired the Hobron property in 1989, buying the hotel from Outrigger for $40 million and paying several other owners about $23 million for the adjacent parcels.
According to the Nihon Keizai Shimbun, Japan's largest economic and financial daily newspaper, Odakyu racked up a cumulative loss of $27 million through June on its investment.
