Posted on: Wednesday, June 4, 2003
Landowner sues to block hotel-to-condo conversion
By Andrew Gomes
Advertiser Staff Writer
Buyers who rushed to snap up leasehold units in the Aston Coral Reef Hotel in Waikiki may be caught in a legal limbo after landowner The Queen Emma Foundation filed a lawsuit recently to block conversion of the hotel to residential condominiums.
The landlord said in the suit that its approval is required before the Coral Reef can be converted to condos, according to the ground lease, and that the foundation "has no intention" of giving such approval.
"What they're trying to do is sell something they don't have the right to sell, and that is a condo that encumbers the fee-simple title to the property," said Rosemary Fazio, an attorney representing Queen Emma Foundation.
Fazio said developer Coral Reef Development LLC, headed by local hotelier André Tatibouet, sought the foundation's consent to the conversion only after the lawsuit was filed and had not previously informed the landowner of the conversion plan.
Trevor Brown, an attorney representing the developer, said he was surprised that the landlord would object to the conversion and take a "mistaken" position that the sale of leasehold condos would burden the fee-simple ownership of the property. But Brown said he is hopeful that the disagreement can be resolved out of court.
The leasehold interest in the hotel, at 2299 Kuhio Ave. mauka of International Market Place, was acquired by Tatibouet in 1976. The lease runs until 2050.
Tatibouet, through broker Hawaiian Island Homes Ltd., found buyers for more than 200 of the hotel's 247 units during a single weekend in early May. At asking prices between $59,500 to $150,000, a conversion could raise about $25 million for Tatibouet, founder and former president of Aston Hotels & Resorts.
The lawsuit, filed in state Circuit Court late last month, asks that the sale offering have no effect. A hearing date has not been scheduled.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
