As One Of The Hawaiian Paradise Has Become A Ghost Town

The pool at the clubhouse Kukui `Ula, a real estate development on Kauai.

Wandering in the warm embrace of the clubhouse on the southern coast of Kauai's pristine Kukui'ula to catch a glimpse of how the other half lives. Or, more accurately, the other 0.1%.

But with the global economy in turmoil, and real estate wounds still festering in the country, there is Trouble in Paradise.

"We opened in 2008 and followed a month later, Lehman Brothers went down," said Brent Herrington, president of Kukui'ula.

"There was a time when it was like the end of the world," he said. "But we came together as a partnership and decided to move forward."

Undoubtedly, the expansion of 1,000 acres of development land with great Poipu its way is fascinating.

A golf course with sweeping ocean views, a world-class spa, waterfall pools, a clubhouse for $ 100 million. Ice, even to match drinks. What the customer wants, the customer receives.

 Riding Out Cycles

Today, the cabins are from a range of $ 2 million as well as home sites cost between $ 1 million to $ 3 million. Then there is a monthly club membership fee of $ 1,000, needed to be part of any purchase.

With nearly 90,000 hectares, Alexander & Baldwin (NYSE: ALEX - News) is one of the largest landowners in Hawaii, and has been for over a century. Its sugar business in the inheritance of its subsidiary, Matson Navigation shipping, there are many more for the company and property development.

[Click here to buy or sell a home.]

But it does not minimize the significance of the grand scheme of things Kukui'ula A and B. The company has already provided $ 225 million in cash for their part in the joint venture. To put that in perspective, Posted & B total revenue $ 488.2 million last quarter, while earnings dipped in the year ago $ 18.7 million.

"Kukui'ula is a significant investment of A & B ... one that we believe, generate invaluable in the long run," said Chris Benjamin, president of A & B Properties. "The market is recovering and we have an irreplaceable asset that work very well in the coming years, because there are no comparable new project in Hawaii, and we do not think there will be a similar project in the future predictable ".

Kukui'ula Benjamin describes as a "long life of the project," compared with the great success of the company stood at Wailea, Maui, which was developed in 1970 and 1980.

"What is important is being able to drive through the cycles," he added. "The project has no debt, and A & B has the ability to maintain the project and benefit from the great cycle-up."

Herrington, DMB aside an employee of the company, has helped transform some of the major projects of the other company in winners, and is quick to note the receipt of a global trade offensive in recent years has been positive. However, buyers reacted with blank checks.

Why? The reasons are clear: It's a great luxury spending a relentless global recession showed few signs of slowing.

Do not move on prices

Larry Leight, which sold its high-end sunglasses Oliver Peoples business Luxottica Group (NYSE: LUX - News) subsidiary, Oakley in 2006, has a holiday home near the road and courted as a potential Kukui'ula member.

Impressed as he is, Leight is struggling to justify that kind of financial commitment at this time.

"You can find the luxury at this level elsewhere, especially in a context like this. But I do not think we've hit bottom in the market yet," said Leight.

"In the current economic condition, it is difficult to get such a luxury today, although interest rates and prices are improving," he added. "It may take some time, but I think the project will be a great success."

The price is one thing, however, with Herrington and senior officers intend to persevere.

"We believe that the market recovery is still two or three years away, and could be even more. None of the expected downturn in the deep and lasting as this, but we are ready to be here," said Herrington. "We have no intention of being a sellout. This is the last large-scale development of luxury in Hawaii during our life. Maybe forever."

He preaches patience. And it seems to be fine with those whose fortune is tied to long-term project success.

Mick McGuire, a former hedge fund analyst giant Pershing Square, is a believer. Marcato now heads the Capital Fund Management, which owns 551,881 shares of B & Pershing, while it has about 3.5 million shares, according to a document recently filed with the SEC.

It does not hurt that Alexander & Baldwin securities has been recovered by 13% last year over a volatile stock market. It's easier to be patient when shareholders are happy and believe in the project.

"It 'a wonderful property in one of the best and the last of the most beautiful islands in Hawaii and the other has significant value," McGuire said, adding that he sees "tremendous potential for development."

Now that the potential terribly important, because the reality is more brutal.

Posted in: tourism