Kevin Harrington Interviews one of our Principals, Andrew Rowland!
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The Vision & Concept
The vision for Opihihali encompasses a 324-acre agricultural and residential community and a 15-acre lodging area with amenities for eco and ag enthusiasts. Emphasizing low-density, minimal environmental impact, the community will offer expansive 5-acre+ homesites and a limited number lodge units, the Ocean Villas. Central to its commitment is the preservation and protection of archeological sites and access for native Hawaiians and cultural practitioners, underscored by sustainability through the adoption of renewable technologies and best practices. A conservation zone will be maintained along the sites nearly 3000’ of Pacific coastline. The community’s agricultural operation will be professionally and centrally managed by a co-op from which homeowners’ benefit.
Aloha (/ɑːˈloʊhɑː/; Hawaiian: [əˈloːˌha]) is the Hawaiian word for love, affection, peace, compassion and mercy, that is commonly used as a simple greeting but has a deeper cultural and spiritual significance to native Hawaiians, for whom the term is used to define a force that holds together existence.
Overview
This is an investment offering in a real estate investment fund , The Kona Estates Fund II, LLC. Pledges are being taken now and funds are due on a rolling-close. This offer gives investors the opportunity to purchase Class-B Interests in the Primary Round and to participate in the project alongside the sponsor/developer, Kona Development Partners, LLC. Class-B interest have a Target Equity Multiple of 2.77x and a Target IRR of 25% over the investment period. This investment represents ownership in The Kona Estates at Opihihali as described in The Project in its entirety. This investment offering is limited to $20MM for a 40% equity position; the minimum investment is $100K.
Key Deal Points
Your Investment is Immediately Backed by Free & Clear Real Estate
The acquisition of the 324 acres of oceanfront property has already been completed using private equity funds raised in Fund I.
No Leverage is being used for Infrastructure or Acquisition
The Manager has been patient in its pursuit of this project, tactful in structuring the offer, and successful in its negotiation of favorable acquisition terms. As a result, the Manager does not anticipate needing to use senior debt to finance the infrastructure or complete the acquisition.
Worldwide Demand & Recognition
The allure of Hawaii and its popularity stretches the globe. Simply put, it’s a bucket list item for most everyone to visit Hawaii. Its geographical position is ideal for relatively easy access from the entire Pacific Rim. More than 10MM people visit per year, spend $16B per year, and those figures are increasing 5% per year on average; it’s inevitable that demand in the Hawaiian real estate market will continue to increase while availability continues to decrease.
Economic & Legal System Confidence & Consistency
Although there are many exotic tropical island destinations around the world in which affluent people could invest, call home, and/or have a vacation home, the unstable market conditions and uncertain legal systems of foreign island nations create high levels of risk for such investments. However, Hawaii has a long proven real estate market with a history of appreciation and emergence from economic downturns. When combined with the confidence and consistency the US legal system, Hawaii real estate stands above all other exotic tropical island destination investments.
Dependency upon Debt Mitigated and the Requirement of a Large-Scale Exit Event Eliminated; while Upside Potential is Preserved
The Fund will not depend on large-scale senior debt to complete acquisition, large-scale refinance debt during the investment cycle, or a large institutional purchase event to exit (all of these scenarios are very common with most CRE private equity deals). Due to the disciplined selection of property and favorable acquisition terms negotiated, the Fund will be able to complete infrastructure, acquisition, and amenities construction through this current offering of equity and a future offering of reserved equity that will NOT dilute first round investors. This capital structure in combination with the unrivaled Upside Potential and High Returns often realized in ground-up Development projects (versus value-add, core, and core-plus profiles) is a highly attractive proposition.
Sponsor/Manager/Developer takes No Fees from the Fund
The Manager will not charge any acquisition, disposition, asset/fund management, financing, property management, or construction management fees. In addition, the Manager will not begin receiving its prorata share of distributions until 100% of investors initial capital investment has been returned. When we say you are investing alongside, shoulder-to-shoulder with the Sponsor/Manager and interests are aligned, we are serious!
Sponsor/Manager/Developer Track Record
With a specific concentration in destination real estate, the Sponsor/Manager/Developer has a track record that accounts for nearly $1B in real estate sales via development, value-add, and opportunistic project profiles.
Rolling Exit & Deal Flexibility
Distributable cash is created, and the deal is exited over the investment cycle with each single-family residence or estate homesite sale. The deal does not depend on institutional capital markets during operations or a large institutional buyer for an exit event. The Manager can control the pace of the project, guard against temporary downturns, and take advantage of market surges over the investment cycle. This type of flexibility puts the Fund in the best possible position to achieve projected returns while mitigating risk associated with market fluctuation.