Hawaii Refinancing Helps KSL Capital Unlock $148M From Hotels

KSL Capital completes Hawaii refinancing on two resorts, unlocking $148M in equity while holding long-term bets on tourism recovery.

September 19, 2025

Valerija I.

KSL Capital Partners secured a $480M refinancing package for two Hawaii resorts—Outrigger Reef Waikiki and Sheraton Kauai Coconut Beach.
The deal includes $325M in senior debt and $155M in mezzanine financing, allowing KSL to extract $148M in equity.
Despite a slow return of international tourists, particularly from Japan, the resorts benefit from limited hotel development and new short-term rental restrictions in Hawaii.

Key Takeaways

Refinance Unlocks Liquidity, Retains Ownership

Private equity investor KSL Capital has refinanced its two-resort Hawaii portfolio in a $480M deal, reports CoStar. The transaction allows the firm to pull out nearly $150M in equity. Despite the cash-out, KSL retains full ownership of both properties. The capital stack includes senior and mezzanine debt, structured through a Wells Fargo-led CMBS transaction.

The refinancing applies to two full-service beachfront resorts: the 658-key Outrigger Reef Waikiki Beach Resort in Honolulu and the 314-key Sheraton Kauai Coconut Beach Resort on Kauai. Together, the portfolio totals 972 rooms.

Capital Improvements And Strategic Enhancements

Since acquiring the properties between 2016 and 2017, KSL has invested over $112M in renovations and upgrades. Enhancements include:

A new chapel at Outrigger Reef targeting destination weddings, especially for Japanese travelers
A new Monkeypod Kitchen restaurant, marking the local chain’s debut in Waikiki

Notably, KSL pledged its 20% stake in Monkeypod Kitchen as part of the loan collateral—an unusual move for hotel-backed CMBS deals, but not without precedent.

Favorable Market Conditions

The refinancing comes amid a tight hotel development pipeline in Hawaii. Just 210 rooms are under construction in Kauai, with no new hotel projects underway in Waikiki. Meanwhile, Hawaii’s Senate Bill 2919, which restricts short-term rentals, is expected to direct more travelers toward hotels.

While Japanese tourism—a key market for Hawaii—has yet to fully recover post-pandemic, KSL appears to be betting on a longer-term rebound. Visitor numbers from Japan in 2024 were still under half of 2019 levels, according to US travel data.

Financing Terms

The senior loan, originated by Wells Fargo, carries a floating rate over SOFR with a two-year term and three one-year extension options. The mezzanine portion, split into three loans, carries spreads between 4.25% and 8% over SOFR.

Bottom Line

KSL’s refinancing highlights ongoing investor demand for well-located, high-end hospitality assets. This trend persists even as some international travel segments remain below pre-pandemic levels. With limited competition and new regulations favoring hotels, the firm appears well-positioned to benefit from Hawaii’s long-term tourism recovery.