SAIPAN Portopia Hotel Corp., the Japanese company that operated Hyatt Regency Saipan for over 30 years before it shut down on June 30, 2024, has asked the Department of Public Lands to approve the assignment of the land lease contract to Coldwell Solar owner David Hood and MB Capital LLC.
This was disclosed by DPL Secretary Teresita A. Santos in her response to an inquiry of Reps. Angelo Camacho and Julie Ogo about two weeks ago.
The land lease agreement between DPL and Saipan Portopia, as amended on July 9, 2024, allowed the company to assign the lease to a new investor two or more years from the date of execution of the lease agreement, which was signed in October 2021.
Although Saipan Portopia still has 38 years left in the lease contract, Santos said DPL will have to declare a default on the lease once the hotel premises have been abandoned for 90 days, which will be on or after Sept. 28, 2024. Then, DPL will execute with Saipan Portopia a mutual cancellation of the lease agreement to allow DPL to take possession of the premises, which sit on 4,432 hectares of public land in Garapan.
The DPL secretary told Camacho and Ogo that on July 18, 2024, Saipan Portopia asked DPL to approve an assignment of the land lease contract to Hood and MB Capital LLC. She said Hood and MB Capital LLC “has business experience in the U.S. and Saipan, including 35 years in residential and commercial development projects.”
Santos provided the lawmakers with documents pertaining to the new investors’ interest in acquiring the Hyatt property. She said Hood’s Coldwell Solar “is valued at over $200 million” and it intends to fund the renovation of the hotel, which the prospective investor estimated would cost about $30 million.
The DPL secretary vouched for the new investors who, she said, proposed to staff the hotel operations by hiring a general manager and rehiring former Hyatt employees.
“MB Capital LLC’s vision for the hotel is to maximize tourism as well as cater to local businesses and local experience with the goal of reestablishing a connection with local markets and the community,” Santos said.
She said all potential purchasers interested in acquiring the lease contract “were referred to Saipan Portopia and all the negotiations with those interested parties were handled by Portopia.”
Concerned
Camacho and Ogo, in their joint letter, told Santos that they are “sincerely concerned.”
They want to know whether DPL and Saipan Portopia have adequately considered other potential investors interested in acquiring the lease.
They said it is their understanding that DPL may engage in exclusive negotiations with a single, favorable buyer, “which raises concerns about fairness and transparency.”
Camacho and Ogo chair the House Committees on Natural Resources, and Commerce and Tourism, respectively.
To select a new investor, they urged DPL to give due consideration to all interested parties to ensure that the lease of public lands is conducted in a manner that is both beneficial and in the best interest of the Commonwealth.
Camacho and Ogo asked Santos to provide them with justification for allowing Saipan Portopia to negotiate with only one investor. They want her to explain “why other interested parties were not given the same opportunity and how this aligns with DPL’s leasing mandate.”
In her response, Santos said “DPL is not currently in possession” of the Hyatt premises and has no ability to lease or sublease it to other parties because the premises are still under lease to Saipan Portopia. She said DPL’s role is limited to reviewing requests from Saipan Portopia to approve proposed lease actions, including a possible assignment of the lease to a new investor.
Santos said these developments with the Hyatt’s lease are different from the request-for-proposals process that DPL follows for properties not subject to an existing lease. In the case of Hyatt, she said, “DPL is not able to review competing proposals to select a preferred assignee at this time.”
If the lease agreement is terminated by DPL, either by declaration of default or execution of mutual cancellation of agreement, then DPL would publish an RFP to give all interested parties an opportunity to submit proposals, Santos said.
The other investor
On Aug. 9, 2024, DPL received a proposal from M&E Enterprises Inc. Saipan, which is also interested in acquiring the Hyatt premises. The local company is a subsidiary of Dream Park International Inc., which has offices in Atlanta, Georgia, and Seoul, South Korea. It proposes to spend $34 million on the first round of hotel renovation and the purchase of new hotel equipment.
The company is willing to keep the Hyatt brand but if Saipan Portopia says no, it will contact Hilton U.S.A and Lotte Hotels in Korea.
In her response to M&E, Santos said the Hyatt premises are “encumbered” by a lease agreement that DPL and Saipan Portopia signed almost three years ago. She added that DPL is reviewing Saipan Portopia’s request to assign its lease to Hood and MB Capital LLC.
She asked M&E to send their proposal to Saipan Portopia.
