Invest in The Kona Estates at Opihihali
The Kona Estates at Opihihali will be a luxury estate and agriculture community situated on 324 oceanfront and ocean-view acres on the famous Kona Coast of the Big Island of Hawaii. The property is graced with extraordinary natural beauty and spectacular geological formations, including a natural lava arch into the ocean, ocean caves, and perfect weather. Elevated 1250’ above sea level, descending gradually to the coastline, the property’s natural topography provides unobstructed 180-degree views from every estate homesite.
Site Photos
How it Works – The Kona Estates Fund II, LLC
Investors’ capital will be used to develop The Kona Estates property (see Site Information below for details about the planned development). Returns will be generated through cash proceeds from the sale of each residence or estate homesite sale, distributed to Investors pro rata, thereby creating a rolling exit over the investment cycle.
The project will not depend on access to institutional capital or debt during the infrastructure development stage, and will not require a large institutional buyer for an exit. The Manager can control the pace of the project to take advantage of market surges and guard against temporary downturns over the investment cycle. Our disciplined approach will allow the Fund to complete the acquisition, infrastructure, and amenities construction through this current equity offering and a future offering that will not dilute first round investors. This capital structure, along with the strong upside potential and attractive returns that can be realized through ground-up development projects makes The Kona Estates Fund II, LLC a highly attractive investment opportunity, and provides flexibility that strongly positions the Fund to achieve its projected returns while mitigating risks.
Kona Development Partners (the Manager) does not charge the fees typically seen with private equity investments. Instead, the Manager will profit in the same manner as the Investors, from its pro-rata share of cash distributions, and only after Class-A Investors’ initial capital contributions have been returned. This way, the interests of the Manager and the Investors are aligned, and Investors’ capital has priority.
About Opihihali & the South Kona Coast Region
Opihihali is located on the South Kona Coast, in the heart of the Kona Coast Coffee region, only minutes to uncrowded sandy beaches that are particularly good for swimming, due to warm water and a lack of currents. It is a short drive to the more populated areas of Captain Cook and Central Kona that offer activities including golf, parasailing, surfing, fishing, whale watching, swimming with the dolphins, windsurfing, and snorkeling. To the north, the main town of Kailua-Kona offers deep-sea fishing and submarine excursions, sunset cruises, and many shopping, dining, and entertainment options. Opihihali is the perfect place to enjoy the Kona Coast’s unhurried lifestyle and bask in its breathtaking scenery.
Weather. The Big Island of Hawaii offers surprising variety, with 11 of the 13 different climates found in the world. The Kona Coast area averages 77 degrees in the summer and 72 degrees in the winter, with tropical rainfall of 1.9 - 3.9 inches per month. With arguably the most ideal year-round climate in the world, South Kona (unlike the more developed North Kona area) has almost no wind.
More Information on the Kona Estates
The Kona Estates will have estate homesites partially dedicate to agriculture, including two- to four-bedroom Pool Villas and four- to six-bedroom Grand Estate homes. The community will feature amenities for its residents and guests.
The Kona Estates at Opihihali will also include a 15-acre, 40-villa luxury lodge with a clubhouse and amenities. The luxury lodge will enhance the overall community experience and will be available to The Kona Estates residents without restriction. It will also be used to host prospective real estate purchasers.
The Project site offers unobstructed 180°+ views of the magnificent Pacific Ocean. It is located 29 miles south of Kailua-Kona and 17 miles south of Captain Cook. The villages of Kealia and Hookena are nine miles to the north, and grocery, gasoline, and convenience stores are 10 minutes away. The project is approximately 45 minutes from the Kona International Airport.
Investment Requirements
The minimum investment for our real estate investment fund is $100K. The Fund has a target equity multiple of 2.2x, and a target IRR of 22%.
Kona Estate FAQ's
What are the benefits of investing in The Kona Estates Fund II, LLC?
This passive investment gives individual accredited investors an early equity stake in the entire project. Benefits include the ability to take advantage of long-term capital gains, favorable taxation, and depreciation. For those interested in direct ownership in the development, B-round Equity Investors will receive both the pro-rata share of equity based on their capital contribution and a Matching Funds Real Estate Credit Certificate that can be applied to the purchase of a homesite/home prior to the public Pre-Sale offering.
Is this different than buying shares in a REIT?
Yes! The Kona Estates Fund II, LLC (TKEF II) and REITs both generate returns through real estate investments. However, investing in TKEF II makes you a partner of the Fund and a partial owner of the entire project, with the potential for long-term capital gains, favorable taxation, and depreciation. In contrast, REIT investors do not directly own real estate assets, the interests of the REIT manager and the REITs investors are not always aligned, REIT management fees are often significant and not linked to performance, and returns are likely to be taxed at higher rates.
What type of accounts can I invest through?
Investments can be made through personal accounts, investment accounts, retirement accounts, joint accounts, and certain entity accounts (Trusts, Limited Liability Companies, Limited Partnerships, C Corporations, and S Corporations). Note that the Accreditation requirement for an entity is greater than for an individual.
Can I invest through my IRA?
Yes, but it must be a Self-Directed IRA with a custodian that has approved the use of Alternative Investments. If your IRA does not meet these requirements, we can guide you through the process of rolling over your IRA to a Self-Directed IRA with a Trust Custodian.
Do I have to be an Accredited Investor to invest? Am I an Accredited Investor?
Yes. This is a Regulation D Rule 506(c) offering available to Accredited Investors only.
An Accredited Investor, in the context of a natural person, includes anyone who:
- earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR
- has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
How are Kona Development Partners (the Fund Manager) and The Kona Estates Fund II, LLC (the Fund) different than most other CRE private equity fund opportunities?
- 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 Used for Acquisition or Infrastructure – By patiently pursuing this project, and carefully structuring and negotiating favorable acquisition terms, the Manager does expect to use senior debt to complete the acquisition or to finance infrastructure costs.
- International Reputation Supports Demand – Hawaii’s allure and enduring popularity span the globe, and its location is ideal for vacationers from around the Pacific Rim. Over 10 million visitors spend $16B annually, at an average growth rate of 5% per year. Hawaii is a proven real estate market that has consistently appreciated over time and has held up well in economic downturns.
- Exotic Tropical Island with US Market Security & Legal System Certainty – Exotic island destinations in foreign jurisdictions could attract buyers looking for an investment and/or vacation home but have unstable market conditions, and uncertain and unfamiliar legal systems. The stability, security and certainty of the US legal system helps Hawaii real estate to stand out from other tropical island real estate investments.
- Avoiding Debt Significantly De-risks the Project while Preserving Upside Potential – Unlike most CRE private equity deals, the Fund will not depend on large-scale senior debt to complete acquisition or infrastructure development. The Managers expertise in destination real estate marketing and sales combined with their rolling exit strategy, allows for maximum profit potential.
- No Fees to the Sponsor/Manager/Developer – The Manager will not charge fees for acquisition, disposition, asset/fund management, financing, property management, or construction management. We are committed to ensuring that the interests of the Investors and the Sponsor/Manager are fully aligned.
- Track Record – With specific expertise in destination real estate, the Fund Sponsor/ Manager/Developer has a track record that accounts for nearly $1B in real estate sales via development, value-added, and opportunistic projects.
- Rolling Exit & Deal Flexibility – Since the investment in the Fund is exited gradually as each single-family residence or estate home-site sale is completed, the project will not require a large institutional buyer for an exit event. The Manager does not expect to access the capital markets during operations and can control the project pace in response to economic conditions over the investment cycle. This puts the Fund in the best position to achieve projected returns and maximize profitability.
Site Description & Location Information
Site Dimensions
Approximately 6,200 feet in length and over 2,000 feet in width (ocean frontage)
Site Location
Project is located 36 miles south of Kailua-Kona and 18 miles south of Captain Cook. Nearest villages are Kealia and Hookena, located 9 miles north. Grocery, gasoline, and convenience stores are 10 minutes away.
Project site offers unobstructed 180°+ views of mountains and ocean. The project is located approximately 40 minutes from the Kona International Airport.
Transportation
There are 8-12 nonstop daily flights from LAX and SFO to KOA depending on the season. United, American, Alaska, Delta, and Hawaiian are the prominent airlines servicing KOA with nonstop flights from LAX and SFO. Additional nonstop domestic flights throughout the week from Anchorage, Bellingham, Dallas, Denver, Oakland, Phoenix, Portland, San Diego, San Jose, Seattle, and Vancouver are regular routes. There are International arrivals from the South Pacific and three nonstop flights from Tokyo per day. Mamalahoa Highway is easily accessible and the major cosmopolitan areas of the Island are within a 20 to 30 minute drive. Shuttle services, private car hire, rental cars, and charters will be available onsite at the concierge’s desk.
