LIHUE — The former Coco Palms resort property is being sold, according to an executive with a Utah-based real estate developing group overseeing the long-delayed construction project aimed at restoring the iconic hotel.
Paul Bringhurst, director of real estate development for Stillwater Equity Partners, said Friday that the Wailua land where the Coco Palms ruins sit is currently under contract with a buyer who intends to proceed with construction once the sale is finalized in a couple months.
Bringhurst said he could not yet reveal the name of the entity purchasing the property and declined to provide specific figures regarding the sale price. He would not comment on future plans for the property but said the buyer intends to get construction underway immediately after the sale.
News of the land sale comes on the heels of a foreclosure lawsuit filed in Fifth Circuit Court by a Stillwater affiliate that negotiated and oversaw financing of the initial stages of the proposed development. The civil complaint was filed against Coco Palms Hui LLC and two Honolulu real estate developers — Chad Waters and Tyler Greene — who formed the corporation and initiated the project in 2016.
On Tuesday — a few days after prospective owners agreed to purchase the property — a civil complaint aimed at forcing the foreclosure sale of the Coco Palms property was filed by Private Capital Group, a short-term, loan-servicing company owned by Stillwater’s parent corporation.
The seemingly-counterintuitive timing of the foreclosure lawsuit is actually a relatively common occurrence in real estate development deals like the Coco Palms project, according to Bringhurst, who explained that foreclosure proceedings were initiated by Private Capital Group as a sort of preemptive measure to insure the interests of its investors.
Bringhurst said attorneys for PCG filed the suit essentially as a contingency measure in case the property sale were to somehow fall through during the 60-day period between the initial agreement and final closing. In that event, litigation to auction off the property and direct the proceeds to PCG lenders would already be in place.
That outcome, however, does not appear likely. If the sale proceeds as expected, Bringhurst said the foreclosure suit will be dropped once ownership of the property officially changes hands.
Only one of the two investors named in the foreclosure suit could be reached for comment. Greene has not responded to TGI phone calls and requests for comment in months. Waters replied to email and text messages and engaged in a marginally substantive, halting conversation that took place between Thursday evening and Friday afternoon.
Waters ignored questions about news of the property sale and provided little insight into the foreclosure suit or his involvement with the property, but in an email exchange Friday, Waters took exception to a TGI article published Friday.
The article referenced state business records naming Waters and Greene as the sole managers of Coco Palms Hui LLC, but Waters pointed out that Stillwater announced in a news release earlier this year that he and Greene had been replaced as managers of the corporation, and questioned whether the state’s online business registration database was up to date.
Waters also raised an interesting question about why he and Greene were named personally in the foreclosure lawsuit, given the fact that they no longer manage the construction project or its associated corporation.
“If Stillwater is the manager per their own press release that TGI printed,” Green wrote in an email Friday, “then why is Stillwater not named and we are?”
The answer to that question is contained in the civil complaint and the heavy stack of loan documents stapled to the back. The foreclosure suit alleges Waters and Greene defaulted on a $22.2 million loan within months of borrowing the money. Normally, an LLC protects individuals from personal liability, but included in the loan documents signed by Greene and Waters were stipulations in which both agreed to “irrevocably and unconditionally guarantee” repayment of the loan.
In other words, they may end up having to pay the money back personally.
If the Coco Palms property sale goes through, the proceeds will go toward paying back the lenders — a small collection of investors who hired PCG to negotiate and coordinate the terms of the contract. The problem for Waters and Green, potentially, is that the property sale may not generate enough money to cover the amount they borrowed.
Bringhurst could not specify how much the property is going for, but said Friday, “I don’t think the sales price will cover everything” the PCG investors are owed.
Caleb Loehrer, staff writer, can be reached at 245-0441 or firstname.lastname@example.org.