Kamehameha Schools cashes in on Royal Hawaiian Hotel land

Kamehameha Schools has made what it described as a difficult but strategic decision to sell the land under the Royal Hawaiian Hotel in Waikiki, one of its most valuable properties in Hawaii.

The trust reported selling the 10.3-acre parcel under the pink beachfront hotel for $510 million to Japan-­based commercial real estate firm Daisho Co. The sale closed Thursday.

The hotel itself continues to be owned by Kyo-ya Hotels &Resorts under a long-term land lease, from which Kamehameha Schools had long earned income.

Livingston “Jack” Wong, Kamehameha Schools CEO, said in a statement that now was the best time to sell the land under the hotel.

Sterling Wong, a Kameha­meha Schools spokesperson, on Monday said the sale wasn’t connected in any way to litigation filed by a mainland nonprofit organization in October challenging the school’s admissions policy that gives preference to students of Native Hawaiian ancestry.

In an October announcement about the trust’s five-year plan through 2030, Wong emphasized that land is a foundation for the trust to fulfill its charitable mission to educate Hawaiian children, but that the trust also strives to generate “competitive financial
returns.”

Crystal Rose, chair of
the Kamehameha Schools board of trustees, also said in a statement that it was a difficult decision to sell land, or aina, left to the trust by founder Princess Bernice Pauahi Bishop, the last
direct descendant of the Kamehameha line of Hawaiian monarchs.

“We are always emotional when we sell land because all aina is special,” Rose said. “We only sell after much deep and agonizing consideration. Our kuleana (responsibility) is to steward a dynamic portfolio that best serves our trust. At the same time, we know that our lands carry historical significance, especially this one, which our founder and generations of ali‘i (royalty) before her had nurtured.”

Since the trust was established in 1884 upon Bishop’s death, it has been the largest private landowner in Hawaii. Much of the the trust’s more valuable property was leased for residential and commercial development, though a considerable portion of residential land has been sold over many decades that allowed the trust to reinvest proceeds in other assets generating income to help perpetually sustain its education mission.

In 2024, the trust’s investment portfolio was valued
at $15.2 billion, including $4.7 billion in Hawaii real estate and $10.5 billion in diversified global investments.

Kamehameha Schools land sales in recent years have included parcels in
Kakaako turned into residential condominium
towers with development partners. Earlier this year, the trust sold the land under the Four Seasons Resort Hualalai on Hawaii island.

The Four Seasons land was sold to the hotel’s owner, Michael Dell, for about $400 million in August following years of ground lease rent that Kamehameha Schools said it used to help educate thousands of children over more than three decades.

Often though, the trust has opted to sell commercial buildings while retaining its underlying land.

For instance, the trust sold Royal Hawaiian Center but not the land under it for $697 million in 2014, about seven years after spending $115 million to renovate the Waikiki shopping center that it developed in 1981.

Kamehameha Schools said it is not currently considering any sale of the land under the shopping center, which is next to the Royal Hawaiian Hotel and includes a historic coconut grove and a statue of Princess Pauahi.

An original piece of the Royal Hawaiian Hotel opened in 1927 and was developed on leased trust land by a company controlled by Matson Navigation Co.

The “pink palace” was acquired by Sheraton Corp. in 1969, and then was sold in 1974 to Kyo-ya along with the Sheraton Waikiki and Sheraton Maui hotels.

Kyo-ya, a Japan-based firm founded by Kenji Osano, had previously bought the Moana Surfrider and Princess Kaiulani hotels in Waikiki.

The original land lease for the Royal Hawaiian Hotel had been extended at least once, and was set to run through 2076.

Kamehameha Schools said it has had a strong
relationship with Kyo-ya
as the hotel owner and ground lessor, and that hotel operations are expected to continue seamlessly under the new landowner.

Daisho, a family-owned private company that owns hotels in Japan, Singapore and Australia but has had no previous commercial investment in Hawaii, has committed to protect cultural elements on the Waikiki site while also investing in scholarships and cultural programming, according to the trust.