Efforts to redevelop the former Coco Palms resort have collapsed, with the two Oahu men behind the project facing foreclosure after defaulting on $11.2 million in financing they used to purchase the property five years ago.
Two Utah-based companies involved in financing the project said on Monday that the Coco Palms property, which consists of about 20 acres on Kuhio Highway at Kuamoo Road in Wailua, was in default and that the ruins of the hotel were being put on the market. The property is owned by Coco Palms Hui, LLC, formed by two Honolulu developers to take over the former hotel famed for hosting dozens of stars, most notably Elvis Presley.
The development follows several years of increasing uncertainty of the viability of the project to redevelop Coco Palms as a modern resort. The property has been in disrepair since it was heavily damaged during Hurricane Iniki in 1992. Coco Palms Hui is headed by Chad Waters and Tyler Greene, who run GreeneWaters, LLC, a Honolulu real estate development firm.
In addition to the 20 acres Coco Palms owns, the resort also occupies 14.8 acres of state land, which Coco Palms has leased since 1983, according to the Hawaii Department of Land and Natural Resources. Lease rights cannot be conveyed to another party without further approval by the Board of Land and Natural Resources, a DLNR spokesperson said.
Rumors of the potential failure of the project have abounded for more than a year. Both former Mayor Bernard Carvalho Jr. and Mayor Derek S.K. Kawakami have voiced frustration that little has happened at the site, which is gradually being taken over by graffiti vandalism and jungle overgrowth.
Neither Waters nor Greene responded to requests for comment on the situation over the weekend or on Monday.
Announcement of the loan default and new work to find a potential buyer for Coco Palms came in a news release from Utah-based Stillwater Equity Partners. Stillwater is working with Reef PCG, a lender and loan servicer, according to Aaron Gerszewski, Stillwater’s asset management director. Both firms are based in Alpine, Utah.
Gerszewski said the collapse of the Coco Palms project had evolved over the last two years or so, after Greene and Waters were unable to deliver on commitments to find funding to avoid default. Although foreclosure proceedings have not been initiated, he said, it would be a logical next step if Greene and Waters are unable to pull together enough money to cure the default.
In a news release distributed later Monday, Stillwater said Coco Palms received most of its working capital from PCG.
“GreeneWaters originally intended to pay off the loan from PCG by obtaining a construction loan, but were unsuccessful and defaulted on the loan in 2017,” Stillwater said.
“To avoid litigation that could potentially delay the project even further, PCG arranged a workout plan with GreeneWaters which included appointing Stillwater Equity Partners as the manager of Coco Palms Hui in exchange for granting GreeneWaters a final attempt at formalizing a plan and securing capital commitments.”
Stillwater said Greene and Waters have not, so far, produced evidence of new financing.
Stillwater added that it is “currently seeking a buyer or partner with hotel experience that can contribute the capital and resources needed to make Coco Palms an iconic hotel as it once was.
“Stillwater has engaged Colliers International to market the project domestically and internationally. In the event a buyer or partner is not found in the coming months, Stillwater is exploring other alternatives for the site that would benefit the community while paying off the PCG note and maximize the value for existing shareholders of Coco Palms Hui.”
The company added that: “In the meantime, SEP is already working with local crews in Kauai to clean up the frontage of the hotel and parking lot to minimize its dilapidated appearance and improve the overall image to potential investors as well as local residents.”
A county spokesperson confirmed that a Stillwater representative was on Kauai late last week and met with Managing Director Mike Dahilig and Planning Director Kaaina Hull in what was described as a “meet and greet” at which Stillwater disclosed that Coco Palms was formally in default on its loans. Stillwater said it broached the subject of county acquisition of the property, but that county officials said there is no available funding.
Kawakami has publicly supported the idea of making Coco Palms into a park and cultural center, but, the spokesperson said, the mayor did not meet with Stillwater’s representative and that the ongoing reality is the county has no way to finance such a transaction.
Gerczewski said Stillwater remains confident that Coco Palms could be redeveloped as a hotel, but that the location and modern hotel economics on Kauai suggest that it would have to be a budget property without the trappings of a luxury resort.
Coco Palms operated as a resort hotel from 1953 until it was devastated by Hurricane Iniki. After the hurricane, owners were unable to secure funding to rebuild, there were disputes over insurance, and the property and it sat abandoned for more than two decades.
In its heyday, Coco Palms was a favorite celebrities and Hollywood show business figures. Its most famous guests included Elvis Presley, Frank Sinatra, Rita Hayworth and Bing Crosby. The hotel served as a location set for several motion pictures, including “Miss Sadie Thompson,” in which Hayworth starred, and “Blue Hawaii,” a Presley film.
Coco Palms Hui was formed in 2013 by Waters and Greene, who insisted they would rebuild the abandoned hotel and restore it to its former glory. They had announced a $150 million project, but were only able to complete a partial demolition, in which interior and exterior walls were removed, leaving abandoned concrete skeletons of the original hotel structures.
Demolition began in 2016. Waters and Greene also announced that Hyatt hotels had signed a management agreement to operate the rebuilt Coco Palms.