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Kona Kai transfer, big hotel leases on tap at port

Revised plans for the Lane Field North hotels and some big hotel leases are each scheduled to come before the Board of Port Commissioners Tuesday.

Along with the transfer of the Kona Kai lease, the votes are scheduled to include the renewal of the leases for the Sheraton San Diego Hotel and Marina on Harbor Island, the Lane Field North hotels, and the Coronado Marriott Resort.

The Lane Field North hotels, which had originally been conceived as a single 400-room facility, are now expected to be dual-branded in a single 200-foot-tall building. One of these is expected to be a 250-key select service venue akin to a Hilton Garden Inn, and a 150-key extended stay hotel such as a Homewood Suites.

Lane Field South would also have about 400 rooms but whether it would be a single or multiple hotels has yet to be determined.

The Port Commissioners also are expected to approve the transfer of the lease of the Kona Kai Resort from an Atlas Hotels entity to a Noble House & Resorts entity known as Westgroup Kona Kai LLC.

Under the terms of the new lease, Noble House will be granted a new 35-year lease with an option that would increase the term to 50 years. The resolution would also grant Nobel House a Columbia Bank loan that is not to exceed $11.4 million.

The minimum lease rate (not counting required percentages on room revenues and sales tax receipts) starts at $452,260 in the first year and climbs to $620,000 by the fourth year.

The leaseholds of the 129-room Kona Kai Resort Hotel with its 512 parking spaces at 1551 Shelter Island Drive, and the adjacent marina where Noble House is already the majority owner, are expected to be combined in the near future.

Noble House plans to spend $5.3 million for an extensive renovation of the hotel before spending $9.1 million to expand the Kona Kai by 45 rooms along with other improvements.

Host Hotels & Resorts (NYSE: HST), which boasts more than half the hotels on the port tidelands, is seeking a new 66-year lease for the two towers of the Sheraton San Diego Hotel & Marina on Harbor Island that total 1,053 rooms. A 50-year lease with a possible 16-year extension is also being considered for the 300-room Coronado Marriott Resort as well.

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