A San Diego-based developer has salvaged a deal to buy the partially built Moana Vista condominium tower in Kaka’ako, and expects to resume construction early next year.
The firm, OliverMcMillan, has signed a contract to buy the property from original developer KC Rainbow II LLC after paying off a $29.5 million lien filed against the property by general contractor Hawaiian Dredging Construction Co.
The deal calls off a foreclosure sale that had been initiated by Hawaiian Dredging and postponed until Friday.
OliverMcMillan said it expects to receive title to the property at 1009 Kapi’olani Blvd., makai of McKinley High School, by Nov. 2, and resume marketing and sales after making some changes to the 46-story tower designed for 492 units.
“We believe in Hawai’i, and see this project as a great opportunity, which is why we are investing substantial capital in the state,” company CEO Morgan Dene Oliver said in a statement.
OliverMcMillan is a 30-year-old private firm that has developed a variety of residential and commercial real estate projects.
The company said it has $2 billion worth of projects in its development pipeline, including a $700 million urban redevelopment plan in Houston, residential lofts in San Diego and a mixed-use project involving a historic winery in Ontario, Calif.
The firm didn’t disclose the total acquisition price for Moana Vista, which it values at $300 million.
If completed as expected, the acquisition would result in a relatively quick revival of a project that had a strong start three years ago but was derailed by unexpected downturns in the global financial market and the local housing market.
Moana Vista was begun by high-tech entrepreneur and University of Hawai’i graduate Fred Chan, who led KC Rainbow and successfully developed the nearby twin-tower condo Moana Pacific.
In May 2006, 466 people entered a lottery to buy 192 Moana Vista units reserved for owner-occupants. Investors reserved nearly all remaining units available for purchase, and construction funded by Chan began several months later.
But after the local real estate market and economy deteriorated sharply last fall, close to two-thirds of buyers canceled their nonbinding reservations. That prevented KC Rainbow from drawing on a $100 million construction loan late last year after roughly $65 million had been invested in the project, mostly by Chan.
Hawaiian Dredging halted work in November, and filed a foreclosure lawsuit in April after applying a $29.5 million lien to the property.
OliverMcMillan in July had a tentative deal to buy the project, but a sale fell through and a foreclosure auction was scheduled for Sept. 25. More negotiations between OliverMcMillan and KC Rainbow led to the auction being rescheduled for Oct. 2.
OliverMcMillan said it plans to rename the project and make some upgrades where it can. The tower is about 40 percent complete, with the structure rising up to the 26th floor.
KC Rainbow canceled about 175 remaining reservations and refunded deposits. OliverMcMillan plans to resume sales and marketing in early November, and will be contacting people who previously reserved units in the building.
As part of an affordable housing agreement with the state, 124 units are reserved for residents earning no more than 140 percent of Honolulu’s median income.