The real estate division of the Mormon church purchased the Residence Inn in Maui Wailea for $100 million.
75 Wailea Ike Drive LLC, an affiliate of Laie-based Hawaii Reserves Inc. and Salt Lake City-based Property Reserve, closed on the acquisition of the 200-room limited-service hotel on 6.4 acres mauka of the Grand Wailea Maui, A Waldorf Astoria Resort, on March 19 for $99.3 million.
Hawaii Reserves owns at least one other hotel in Hawaii — the Laie Courtyard by Marriott hotel next to the Polynesian Cultural Center.
For those of you unfamiliar with the Mormon church, you may be asking – why would a church need a real estate division?
Belief drives creating a reserve fund
The Mormon church believes it has the duty to build up a reserve fund to help support their church and this includes investing in the stock market and buying and managing real estate.
A 2013 Reuters article notes that the Mormon church was Florida’s largest private landowner.
The addition of St. Joe’s 382,834 acres brings the church’s Florida holdings to 672,834 acres, or almost 2 percent of the state’s land mass. The total does not include smaller isolated church parcels for its Orlando and South Florida temples and other interests.
In addition to the real estate holdings, the Mormon Church also holds more than $100 billion in the stock market which was previously unknown until a whistleblower came forward with details.
Church officials acknowledged the size of the fund is a tightly held secret, which they said was because Ensign Peak depends on donations—known as tithing—from the church’s 16 million world-wide members. The church is under no legal obligation to publicly report its finances.
But the whistleblower report—filed by David Nielsen, a former Ensign Peak portfolio manager—has heaped pressure on the church to be more transparent about its finances, something the church has avoided for decades.
The firm doesn’t tell business partners how much money it manages, an unusual practice on Wall Street. Ensign Peak employees sign lifetime confidentiality agreements. Most current employees are no longer told the firm’s total assets under management, according to some of the former employees; few employees understand what the money is intended for.
So the answer to why the Mormon Church would purchase a Marriott for $100 million is its part of its overall strategy of investing tithing money in assets that will continue to grow in size to prepare for the literal return of the Savior.
From the Wall Street Journal article:
Mr. Clarke said the employees must have misunderstood his meaning. “We believe at some point the savior will return. Nobody knows when,” he said.
When the second coming happens, “we don’t have any idea whether financial assets will have any value at all,” he added. “The issue is what happens before that, not at the second coming.”
Whereas university endowments generally subsidize operating costs with investment income, Ensign Peak does the opposite. Annual donations from the church’s members more than covers the church’s budget. The surplus goes to Ensign Peak. Members of the religion must give 10% of their income each year to remain in good standing.