Judge OKs plan for Aloha Tower
By Andrew Gomes
Advertiser Staff Writer
A bankruptcy judge yesterday approved a plan to bring Aloha Tower Marketplace out of a three-year Chapter 11 case by paying unsecured creditors, including several small local businesses, about half what they're owed.
The plan positions giant real estate investment fund Apollo Real Estate Advisors as the sole owner of the retail and entertainment center at Honolulu Harbor, and the third entity to try and make the complex a financial success.
No immediate changes in marketplace operations are expected, but Apollo, known as an opportunistic firm targeting investments with enhancement potential, remains challenged by the marketplace and its financial difficulties that were largely unresolved in bankruptcy.
Apollo several months ago took managing control of the marketplace from its partner Trinity Investment Trust LLC, a local investment group founded by former Amfac Hotels chief Charles Sweeney, attorney Jon Miho and another hotel investor, George Ruff.
The Trinity group had been the majority partner in marketplace owner Aloha Tower LP, which filed for bankruptcy in January 2002.
Apollo partner Richard Ackerman in Los Angeles said his firm will pursue resolution of a critical parking shortage involving the state, but that Apollo's takeover will not otherwise change the marketplace.
Floyd Williamson, marketplace general manager with retail management firm MMI Realty Services, said activity at the center has been improving.
"Restaurants are doing well, and restaurants feed off the restaurants," Williamson said. "Tourism is on the rise and (cruise) ship activity is bustling. I think this year there are over 140 ships coming in."
Last year, Chai's Island Bistro expanded, and earlier this year Gordon Biersch Brewery Restaurant added a banquet room and enlarged its outdoor bar area.
The marketplace is about 90 percent occupied, and Williamson said new tenants are negotiating to take space in the center, though he said he could not identify prospective tenants because leases have not been signed.
But over the three years through January since the marketplace filed for bankruptcy, 12-month operating losses ranged from about $500,000 to $1.5 million for a three-year total of $3.3 million, according to bankruptcy records.
Despite a general economic recovery in Hawai'i over the past several years since Sept. 11, 2001, the biggest operating loss for the marketplace was in the most recent year.
Trinity and Apollo, through Aloha Tower LP, set out to revive the marketplace in 1998 when they bought the project on land leased from the state after the developer who built the center filed for bankruptcy.
Trinity also partnered with Apollo as AHI Aloha LP to buy the outstanding mortgage on the center in 1997 from a Japan-based lender that financed development of the marketplace, which opened in 1994.
But the turnaround effort did not pan out. "It was a bad investment for them," said Chuck Choi, attorney representing Aloha Tower LP.
Aloha Tower LP said its annual average operating losses before filing bankruptcy had been $1.6 million. The company blamed state officials for rejecting several company proposals to cure a parking shortage that has discouraged major tenants from opening stores, and undermined rental rates.
The company also claimed 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 a use that doesn't generate significant customers for the center.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
