Aloha Tower loses $600,000 in 2 1/2 months
By Andrew Gomes
Advertiser Staff Writer
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| As Aloha Tower Marketplace disputes its rent obligations to the state, the waterfront retail complex has racked up some of its worst losses in four years, although there appear to be signs of improvement since the center's owners filed for bankruptcy in January.
Gregory Yamamoto • The Honolulu Advertiser |
In just two and a half months from mid-January through March, the festival marketplace at Honolulu Harbor has run up close to $600,000 in operating losses — $102,706 in the last two weeks of January; $264,838 in February; and $204,145 in March.
Marketplace owners have not made debt payments since filing Chapter 11, and have accrued nearly $1.7 million in additional unpaid expenses during the same period.
The financial disclosures, made in recent bankruptcy court filings, provide the first detailed glimpse into operations of the center since owner Aloha Tower LP filed Chapter 11 on Jan. 15.
Jon Miho, vice president of the partnership, has been out of the country and unavailable for comment.
Todd Hedrick, general manager of the center, said he could not talk about bankruptcy matters, but said marketplace sales, while slow, have rebounded more quickly than anticipated.
"We're seeing the bodies come back," he said.
Hedrick said April sales to date have fluctuated, but should finish the month higher, given projections for 1,000 Japanese shoppers a day during Japan's 11-day Golden Week holiday that starts Thursday.
A Wednesday "Happy Hour at the Tower" promotion that began Feb. 20 also has helped business, making Wednesdays the second-busiest night at the center, Hedrick said.
Next month, possibly by May 5 (Cinco de Mayo), the restaurant Rodeo Cantina is scheduled to reopen in its former upstairs waterfront space.
Still, Hedrick said it's been a challenging environment for the marketplace since late last year. He said new entertainment, eating and shopping attractions at Victoria Ward Centers, combined with the Sept. 11 tragedies and shutdown of Honolulu-based cruise ship operator American Hawaii Cruises, all dealt serious blows to business.
To help the center recover, Aloha Tower LP had asked the state, which owns the land under the marketplace, to reduce lease rent, to no avail.
The marketplace owners thus stopped paying rent, sued the state for more than $10 million, then filed Chapter 11.
In its lawsuit, withdrawn and recently amended and refiled in bankruptcy court, Aloha Tower LP alleges that business was hurt because the state was unwilling to approve several plans to add parking, converted a ferry terminal to another use, and refused to make good-faith efforts to direct cruise ships to Aloha Tower docks.
In its amended complaint, the partnership also charged that security-related measures further compounded financial hardships, including the removal of parking stalls from public use and the continued closure of the Aloha Tower observation deck.
Miho told a meeting of creditors last month that marketplace owners expect to pay all claims fully, except the state's.
Aloha Tower Development Corp., the state agency acting as marketplace landlord, is the center's largest unsecured creditor, owed $199,000.
About 70 others — mostly Hawai'i business and service providers — are owed roughly $630,000.
An Aloha Tower LP partner maintains the balance of the partnership's $84.3 million debt, which includes the original value of the marketplace mortgage, acquired at a discount in 1998.
Miho has said the partnership's general reorganization plan involves paying less rent to the state and providing additional parking to attract more customers and tenants.
