According to the Honolulu Advertiser the Makena Resort, including the Prince Hotel, two golf courses and 1200 undeveloped acres will be heading for the auction block in April. How did we get here?

A venture including Maui development firm Everett Dowling Co. and a Morgan Stanley real estate fund bought the 310-room Maui Prince, two golf courses and 1,300 acres of undeveloped land in 2007 for $575 million from Japan-based Seibu Group with plans to reposition the property. The buyer financed the purchase with the mortgage plus $200 million in equity and $227 million from other investors that received no security in the property. Wells Fargo is the trustee for the mortgage debt held by a group of lenders.

What is likely to happen? Well properties usually continue to operate through procedures like this one. The question becomes what will bidders actually offer?

Often during foreclosure auctions, the mortgage holder can prevent anyone from acquiring the property for less than the amount owed on the mortgage by making a credit bid up to what is owed.

We will keep you apprised.