PRINCEVILLE — The large California public employee pension plan that owns the St. Regis Princeville Resort and Makai Golf Club is in negotiations to sell the property to a buyer identified only as prominent hotel operator and investment firm.
The pending sale was confirmed by an investment consultant working with the Los Angeles County Employees Retirement Association, which has owned the St. Regis and Makai Golf Club properties since the 1980s.
While there have been several changes in hotel management companies running the resort over the years, the pending sale means the ownership of the buildings and land will change hands. Neither LACERA nor the hotel would comment on whether a new management will be brought in.
The sale has been rumored for months, but the St. Regis has said repeatedly that its existing management structure, in which the resort is marketed and run as part of the Marriott-Starwood chain, was expected to continue and that no change was anticipated. However, experts in the hotel investment field said such sales commonly involve either retaining current management or bringing in a new company to take over operations.
“It goes both ways,” said Amelia Lim, a hotel property real estate expert who covers Hawaii for CBRE Hotels, a large industry consultant whose firm is not directly involved in the transaction.
“If the existing contract provides that the management company remains in place in the event of a sale, there will be little change,” she said. “On the other hand, if there is no provision for existing management to survive an ownership change, then a new company could be brought in.”
A hotel investment consultant who has been working on behalf of LACERA confirmed that a sale was in progress.
“I believe that Marriott has already told the employee base at the property that the property that it is being marketed for sale and there is a potential buyer,” the consultant said.
He agreed to comment on the condition that his name and firm would not be used.
He added: “We are in discussions with a well-known and well respected hotel operator/investor.”
The firm handling the transaction for LACERA has been identified in previous news coverage as Barings Investment Services Co.
The pension plan on Tuesday also confirmed news of the sale, according to John D. McClelland, LACERA’s principal investment officer for real estate.
However, it was not clear whether employees at the St. Regis have actually been informed of the impending transaction at any level below top management. Line level employees said their supervisors had informed them there would be a staff meeting soon to disclose the nature of the transaction.
Over the weekend, several employees said that rumors had swept through the hotel of an imminent change in ownership, but that workers had no idea if their jobs were secure or if the hotel would remain open or close for renovation.
“It’s all just rumor,” one worker said. “You don’t know what to believe.”
Reports of a possibly imminent change in ownership spread rapidly internally over the weekend, with some employees saying they were bewildered by the uncertainty of what will actually occur.
Guests staying at the St. Regis over the weekend said they had heard nothing about a pending sale and that operations appeared to be normal.
The St. Regis hotel property has an appraised value of $93.7 million and the golf course is valued at $2.1 million in Kauai County property tax records. No information the prospective sale price was available. The hotel and golf course cover a combined 313 acres.
The hotel has 252 guest rooms. It and the golf course employ approximately 600 people, a spokesperson said.
The St. Regis said its occupancy rate has been in the 80 percent range in recent years. After the April storm disaster on the North Shore, its general manager, Todd Raessler, said that “we saw some decline in April and early May, but have experienced a recovery moving forward.
“We don’t anticipate any significant change in business over the balance of the year and beyond.”
In the immediate aftermath of the disaster, Raessler introduced a temporary program in which the St. Regis made rooms available to workers whose homes were damaged or destroyed or cut off by floodwaters.
The St. Regis is the largest hotel on the North Shore. In addition to the hundreds of people it directly employs, the financial wellbeing of the resort and golf course touch the lives of many additional employees of everything from produce wholesalers to distributors of gift shop merchandise.
LACERA is the pension plan for Los Angeles County and Los Angeles Superior Court employees. It has assets of more than $52 billion, of which more than 11 percent is in real estate.
The real estate holdings have an estimated value of $6.2 billion. However, in April and May of 2018, LACERA announced it was “re-balancing” its real estate portfolio and would divest some of its housing and hotel properties to place more emphasis on industrial holdings.
In June, LACERA disclosed that it had sold half of its $500 million portfolio of multi-family properties. A total of about $700 million in overall real estate investments was reported to be coming on the market.
Stephanie Reid, the public relations director for the hotel, declined to confirm the reported sale. She released a statement saying only that “As the management company for the hotel, we are committed to open communication with our employees on an ongoing basis.”
In March, the hotel filed for building permits for a renovation. The projected date for the start of work is fall of this year. In confirming the renovation plan at that time, Reid said “the resort is in the process of planning a new and exciting chapter with a significant renovation of the hotel.” Her statement said the resort would remain open during the renovation.
A few days after the April storm, Reid said in a statement that: “We expect business to continue as usual here at the resort and no changes in staffing and operations are anticipated.”