An affiliate of Hunt Cos. is now the owner of a partially complete $100 million luxury home subdivision on Hawaii island after a Circuit Court judge enforced a foreclosure sale over objections of project founder and former Home Box Office chief Michael Fuchs.
Hunt, a Texas-based firm active in Hawaii real estate development, acquired 25 single-family home lots, land planned for eight condominium units and two completed condo units in the project called Ke Kailani.
The company said it intends to immediately resume construction and restart sales in the first quarter of 2012.
"We are excited to have acquired this tremendous asset, and we look forward to restoring Ke Kailani to its intended quality," said Steve Colon, president of Hunt’s Hawaii development division.
Fuchs bought the property fronting three Mauna Lani Resort golf fairways leading to the ocean in 2002 for $15.5 million, and obtained $52 million in loans from Bank of Hawaii, Central Pacific Bank and Finance Factors Ltd. to finance development of about 40 single-family home sites and 12 condominiums on 65 acres.
Sales started strong, and Fuchs sold 14 lots and two condos for a combined $38 million. But the recession stalled sales, and Fuchs defaulted on a $22 million loan balance in 2008.
Lenders initiated foreclosure in October 2009 to repossess unsold portions of Ke Kailani, and Hunt later bought the bad loan from the lenders for $17.5 million and pressed on with foreclosure.
Fuchs fought back, and in January placed his development firm in bankruptcy to stall foreclosure one day before a scheduled auction. In May the bankruptcy case was dismissed and foreclosure proceedings resumed.
No one besides Hunt bid at an auction in June, so Hunt used the value of its debt, which grew to $30 million with penalties and interest, to make a $10 million "credit" bid for the property. Hunt also aims to collect the $20 million difference between its credit bid and what it is owed, under a personal loan guarantee, from Fuchs.
Gary Dubin, a local attorney representing Fuchs, criticized the foreclosure as flawed at an August hearing. But Circuit Judge Bert Ayabe ruled against Fuchs last month and approved Hunt’s purchase.
