Dell Inc.(NASDAQ:DELL) Hawaii Resort reaches Loan Workout as Demand Increases

Northern, WI 1/24/2013 (avauncer) - The loan limit on the Four Seasons Resort Hualalai, which is a Hawaiian holiday resort jointly owned by Michael Dell’s MSD Capital LP, is nearing a restructuring due to the increase in room rates as well as demand in luxury homes, according to Patrick Fitzgerald, CEO of the resort. In a telephonic interview, Fitzgerald said, “I anticipate we will reach a conclusion on a very detailed term sheet within the next 30 days. From today’s point of view, the ownership and equity structure will pretty much look the same.”

The loan worth $176 million is supported by the hotel in the resort as well as a leasehold on land was given to a company with an expertise in problematic debt in June, at the time of its maturity, according to Morningstar Inc. (NASDAQ:MORN)’s Structured Credit Ratings unit. The property had been impacted by declining travel following the credit crisis and damage during the 2011 Japanese tsunami. Its value was $356.6 million in August.

The 865-acre resort on the Big Island is seeing rising demand due to increase in travel that has boosted Hawaiian tourism income to a new high. Room rates for at the 243-room Hualalai hotel have reached their high 2007 and this year is likely going to be the best for overnight rates as well as demand, Fitzgerald stated.

The resort’s occupancy is expected to go to over 80% from its previous high of 70% in 2012, Fitzgerald stated. He said MSD and Rockpoint have spent around $40 million on renovating the resort, following the credit crisis in 2008. Bud Perrone, talking for LNR Property LLC, which is dealing with the resort’s loan, refused to say anything about the restructuring. The resort comprises of an 18-hole golf course, a salt-water snorkeling pond having over 3,500 fish and tennis courts.

Revenue for lodging in Hawaii inclusive of room rentals as well as retail sales, increased by 15% to a new high of $3.62 billion previous year ending Sept. 30. Oahu island has seen the maximum occupancy from among the 25 biggest U.S. markets in 2012 with 85%. Although the Big Island has not recovered to the extent of Oahu, the Hualalai resort has gained due to its alterations as well as Four Seasons name. This was stated by Joseph Toy, Chief Executive Officer of Hospitality Advisers. He said, “The Four Seasons name helped them a lot.  That’s a name that carries a particular weight on Hawaii. They would have had a very difficult time as an independent property.”

The resort property comprises 300 residential pieces inclusive of single-family pieces as well as condominiums.  It has sold 35 homes worth $110 million in the previous years. This was the highest number of transactions beginning 2007. As of Jan 18, the resort had 9 deals reaching completion during the first quarter, worth $26 million. Fitzgerald said, the resort has sold properties worth $24.5 million during the initial 3 months last year. The resort is nearing completion of its first sale for  $3.7 million of a development lot during 4 years.

The shares of Dell Inc.(NASDAQ:DELL) were down by 0.30% to close at $13.08