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Kona Kai leasehold changes hands

The leasehold of the 129-room Kona Kai Resort on Shelter Island has reportedly been transferred to a Noble House & Resorts entity known as Westgroup Kona Kai LLC.

Seattle-based Noble House, which already holds the majority of the leasehold on the adjacent 514-slip Kona Kai Marina, plans to spend $5.3 million for an extensive renovation, before spending another $9.1 million to add 45 new rooms to the property. The hotel owner/developer plans to take out a maximum $11.4 million Columbia Bank loan to help pay for the improvements.

Under the terms of Noble House’s contract with the San Diego Unified Port District, the Seattle firm will be able to operate the asset for the next 35 years -- with an option that would increase the term to 50 years.

Noble House, which acquired the leasehold from an Atlas Hotels entity, will be required to pay a percentage of sales tax and room receipts based on a complicated multiyear formula.

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 marina are expected to be combined in the near future.

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