Developer of Coco Palms Resort property secures $431 million in financing for 351-room luxury resort
After decades of projects have gone nowhere to redevelop the once iconic resort that was destroyed by Hurricane Iniki in 1992, the new financing has led to a new hotel opening date of 2028.
7 hours ago
For more than three decades, the once iconic Coco Palms Resort in Wailuā — which hosted A-list celebrities and the film production of Elvis Presley’s 1960s musical “Blue Hawaiʻi” — had sat in ruins before finally being demolished to make way for a new luxury hotel.
The attempts to redevelop the 32-acre east Kauaʻi property, either for various proposed hotels or a community-led effort for a Hawaiian cultural and educational center, have all fallen short.
But on Monday, X-Caliber, a national, direct commercial real estate lender, announced $431 million in Rural PACE-X financing for the redevelopment of the Coco Palm property with a new 351-room hotel featuring a mix of guest rooms and suites.
Rural PACE-X financing is a proprietary financing solution that combines conventional financing and Commercial Property Assessed Clean Energy, according to the company’s news release.
The project also encompasses the restoration of historic structures, reconstruction of accommodations, infrastructure upgrades, and the restoration of iconic dining, retail and event spaces, the lending company said.
Utah-based Reef Capital Partners purchased the property in 2022 with plans to invest more than $400 million in development of a resort. In June 2024, global hospitality company IHG Hotels & Resorts — headquartered in England — planned to built its first Hawai’i location at Coco Palms under its Kimpton Hotels & Restaurants brand. The plans then were to open in 2026.
While the destroyed buildings that were eyesores for decades are gone, nothing has been built.
Chris Callahan, president and CEO of X-Caliber, said in a statement: “Coco Palms holds a unique place in Kauai’s history, and its restoration is an exciting development for the island and its residents. We are proud to support Reef and the entire development team with financing tailored to the project’s needs.”
The Coco Palms financing includes $185.6 million of conventional senior-secured financing through an affiliate of X-Caliber Rural Capital, XRL-ALC, LLC, and $245.35 million of Commercial Property Assessed Clean Energy financing through X-Caliber affiliate CastleGreen Finance.
Together, the loans will provide 80% loan-to-cost financing at an attractive blended interest rate, the press release said.
Now, the property will be operated by Highgate, an industry-leading hotel management firm, according to X-Capital.
But many in the community have fought against a new hotel for years. Community group I Ola Wailuanui presented an alternative vision for the site in 2023, by creating a center of Hawaiian education, cultural practice and community based environmental & land-use stewardship. The site is the documented home of the island’s oldest coconut grove, ancient fishponds and burial sites.
“Coco Palms is listed on both the National Register of Historic Places and the Hawaiʻi Register of Historic Places, and we don’t take that lightly,” said Jon Day, CFO of Reef Capital Partners. “Restoring this property means honoring the culture, history and people of Kauaʻi at every step, and we are committed to doing exactly that.”
The conventional funds are intended to provide construction-through-stabilization financing for up to five years. Commercial Property Assessed Clean Energy funds are intended to be long-term but are prepayable at the borrower’s discretion.
Sal Tarsia, managing partner at Castle Green Finance, said Rural PACE-X addresses the challenges faced by rural areas, “ensuring that development is not just about immediate financial gain, but also about long-term environmental stewardship and a sustainable future.”
The building’s energy efficiency design is estimated to save in excess of $11 million in costs over the lifetime of improvements and will create more than 1,000 construction jobs and 350 full-time jobs, the press release said.
The new hotel is projected to open in 2028.
X-Caliber said its Rural PACE-X pipeline continues to gain strong momentum, closing nearly a billion dollars in volume since the product was launched in late 2024. For more details and full Rural PACE-X product parameters and information, click here.
