Aloha Tower owner files for bankruptcy
By Andrew Gomes
Advertiser Staff Writer
Just four years after trying to rescue financially struggling Aloha Tower Marketplace, the second owner of the festival shopping complex at Honolulu Harbor filed for Chapter 11 bankruptcy yesterday.
Advertiser library photo • August 1996
Aloha Tower LP, an investment partnership that acquired the marketplace in 1998, said millions of dollars in losses and various creditor claims led to the action.
The Aloha Tower Marketplace is in bankruptcy proceedings again, four years after the current owners acquired the mortgage of the financially troubled retail complex. The partnership says business will not be affected by the reorganization.
The partnership said the bankruptcy filing, which will allow it to reorganize, will not affect business at the complex's 120 shops and restaurants.
Aloha Tower LP estimated it had $10 million to $50 million in assets, and $50 million to $100 million in debts, according to the filing.
Partnership president Jon Miho issued a statement saying losses were projected to rise significantly over the near and longer term, increasing from what had been a $1.6 million annual shortfall.
Since the Sept. 11 terrorist attacks, sales have weakened and four center tenants have either filed for bankruptcy or closed, according to the marketplace.
A parking shortage has plagued the center since it opened in 1994. The marketplace has been about 300 stalls short because the original developers failed to build the number of stalls required by the state, which owns the land under the project.
Aloha Tower LP had been working with the state to provide additional parking, but it filed a lawsuit last month charging that the state's unwillingness to approve a number of different parking proposals damaged the partnership's ability to operate the center successfully.
The partnership is seeking more than $10 million in damages. According to the suit, the shortage has discouraged major tenants from opening stores at the marketplace and created a need to reduce rents.
The suit also alleges that the state refused to make good-faith efforts to direct cruise ships to dock at Aloha Tower piers, and converted a ferry terminal to another use that does not generate significant customers for the center.
Miho, who was not available to comment further yesterday, has said the partnership's ability to borrow money was restricted because the parking shortage put it technically in default on its lease with the state.
The Aloha Tower Development Corp., the state agency governing development surrounding the marketplace, is Aloha Tower LP's largest unsecured creditor, with a $199,000 claim for ground rent.
Other creditors with claims of more than $30,000 include trolley operator Enoa Corp., Akal Security Inc. and the state tax and transportation departments.
The bankruptcy is the second involving the marketplace, which was built for $100 million. Project lender Mitsui Trust & Banking Co. Ltd. foreclosed on the property in 1996, and creditors a year later filed an involuntary Chapter 7 liquidation petition against the developer.
Aloha Tower LP and affiliated partner AHI Aloha LP acquired the project out of bankruptcy in 1998 after arranging to buy the project's $60 million mortgage for a discount.
Miho said in the statement that the partnership had spent more than $22 million to buy, improve and operate the marketplace since 1998, and said of the bankruptcy, "We are entering the future on the right footing with this action."
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
