Hawaii real estate start-up targets $300m

Sullivan, Ward, Asher & Patton attorney, Laurence Smith, and the founder of Heller-White Hotel Management, Mitchell Heller, are raising their first private equity real estate fund focused on hospitality developments in Hawaii. The 10-year fund is targeting IRRs of more than 20%.

Hawaii Fund Managers is raising its first private equity real estate fund targeting $300 million for development assets in Hawaii.

The fund, the Hawaii Real Estate Opportunity and Development Fund, was launched by Michigan attorney, Laurence Smith, and the founder of Heller-White Hotel Management, Mitchell Heller. It will invest in hospitality assets, undeveloped and developed land on the island as well as vacation and timeshare homes and projects.

According to a private placement memorandum, seen by PERE, the 10-year fund is targeting internal rates of return in excess of 20 percent, with leverage of between 50 percent and 75 percent. Smith and Heller were unavailable for comment at press time.

Smith has his own private practice and is a shareholder of Michigan law firm Sullivan, Ward, Asher & Patton. He has represented real estate developers, venture capitalists, corporations and individuals in land deals, construction and commercial and residential developments, according to the fund document.

Heller is the founder and president of Heller-White Hotel Management, which has operated and controlled more than 50 properties in the US and Hawaii.

The document notes that although residential real estate sales have slowed on the island, prices of owner occupier properties have remained “relatively steady”, with foreclosure rates lower than in the mainland US. Tourism, the PPM adds, is Hawaii’s largest industry with the firm noting some “growth prospects” on neighbouring islands.

The fund will invest at least 85 percent in Hawaii. Among the potential deals highlighted by the firm, is the 11.8 acre Coconut Plantation Village development which has entitlement to build 192, two-bedroom/two-bathroom condominiums to be managed by Hyatt Vacation Ownership. The firm says the $26 million deal would have IRRs of 30 percent over a four-year term.