LIHUE — The corporation that owns 21 acres adjacent to the Courtyard Marriott in Kapaa has defaulted on a loan it took out two years ago to finance the construction of a 330-unit timeshare development called the Coconut Beach Resort, according to loan foreclosure documents filed in Fifth Circuit Court earlier this month.
Documents attached to the lender’s foreclosure complaint show SPD II Makaiwa Resort Development LLC borrowed $6.5 million in May 2017 but failed to repay the money by the agreed upon date one year later.
After defaulting on the original loan, Makaiwa Resort Development reached an agreement with the lender, extending the loan and increasing the principal amount to just over $9.9 million in July 2018.
A few months later, the lender again extended the term of the loan and advanced Makaiwa Resort Development another half-a-million dollars, bringing the loan balance to $10.4 million, to enable the developer “to pay certain past-due payables, among other things,” according to court documents.
By March 2019, three months had passed since the most recent extension, and the lender filed for default on the loan, claiming Makaiwa Resort Development now owes over $12.1 million when interest, late charges, exit fees, attorneys’ fees and other penalties are added.
In its complaint for foreclosure, the lender is asking the court to place a lien on the property and force the sale of the land to settle Makaiwa Resort Development’s debt.
Mitch Heller, manager of SPD II Makaiwa Resort Development, declined to comment on the foreclosure but said via email last week that the company is “committed to commencing development this summer.”