Posted on: Saturday, January 8, 2005

Bank files suit over Waikiki's Coral Reef

By Deborah Adamson
Advertiser Staff Writer

Central Pacific Bank is foreclosing on the Coral Reef Hotel in Waikiki after the owner of the lease, André Tatibouet, defaulted on mortgage payments.

The bank filed a lawsuit yesterday against Tatibouet, asking a court to make him pay $15.1 million in mortgage principal and interest.

In addition, Central Pacific wants Tatibouet to pay accruing interest and attorneys fees.

Central Pacific also asked the court to sell the hotel lease, which runs to 2050 and is the collateral for a first and second mortgage, and use the cash to pay off Tatibouet's debt. The bank also wants to be able to buy the lease if it chooses.

Tatibouet could not be reached for comment. Central Pacific declined to comment.

Tatibouet planned to sell units of the hotel as condominiums in 2003 and took deposits from 247 buyers.

But the Queen Emma Foundation, which owned the land, sued to block the sale. It argued that condo ownership could force the foundation to sell its fee-simple interest in the property under the city's lease-to-fee conversion ordinance.

Last May, a state judge sided with the foundation and blocked the sale. Coral Reef buyers were to be given full refunds.

Tatibouet offered the units for sale in 2003 at prices ranging from $59,500 to $150,000. According to the foundation, the hotel is profitable and had a value of $27 million as of April 2001.

Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.