The Queen Lili'uokalani Trust, which fought against a law that would have forced it to convert leasehold property to fee simple, now plans to do so voluntarily.

The major Hawai'i land-owning trust was key to the repeal last year of a city ordinance forcing large landowners to sell land under residential condominiums.

But the Queen Lili'uokalani Trust is now offering the fee-simple interest in its 385-unit Lili'uokalani Gardens high-rise in Waikiki, and hopes to soon make similar offers to owners of two other leasehold condos, the 877-unit Waikiki Banyan and 435-unit Waikiki Sunset.

It isn't the first time the nonprofit trust has sold the fee interest in residential property, but the move represents an important effort by the nearly $400 million trust to diversify its assets and raise cash to invest in programs and facilities.

"Like most land-based trusts, we don't have very liquid assets," said trust Chairman and former Circuit Judge Thomas K. Kaulukukui Jr. "It's a business decision."

Potentially more than $100 million stands to be raised from the sale of land under the three buildings with nearly 1,700 units, based on rough estimates of land value. Sales, however, could take years depending on buyer response.

Peter Savio, a local real estate developer retained by the trust to sell the property, said his goal is to initially sell fee interests in 30 percent to 40 percent of units, with more made over time.

Fee prices were not disclosed by Savio or the trust, but will be presented to Lili'uokalani Gardens unit owners at a Saturday meeting.

Selling the land under the Waikiki Banyan and Waikiki Sunset is a trust aim, but requires consent of other nonprofit minority landowners — St. Francis Medical Center, which has a 45 percent stake in the Waikiki Sunset land, and Kawaiaha'o Church, which has an 8 percent stake in the Waikiki Banyan land.

Savio said the trust has not yet approached the two landowners because it wanted to first notify condo owners, which was done on Wednesday.

A fourth Waikiki condo with land owned by the trust, Foster Tower with 136 units, would not be sold because the property is on Kalakaua Avenue and has zoning for hotel use.

Kaulukukui said Probate Court masters for years have urged the trust to liquidate some of its real estate because of the risk of owning so much valuable land in one area.

The trust owns about 6,300 acres of largely agriculture and conservation land on the Big Island, 16 acres in Waikiki and eight acres elsewhere on O'ahu.

Kaulukukui said about 70 percent of the trust's income comes from its Waikiki real estate, which includes land under the Marriott Waikiki Beach, the Pacific Beach and Radisson Prince Kuhio hotels. The four Waikiki condos generate about 13 percent of trust revenue.

In the unlikely event that a natural disaster strikes Waikiki, the trust potentially could see most of its income wiped out, which was a major consideration in selling the condo property.

"Most of our land is within a half mile of the ocean," Kaulukukui said. "That makes it very valuable for the trust, but there is some risk having all those eggs in one basket."

Kaulukukui said trust directors carefully studied the condo land sale idea since the beginning of the year and in September voted to pursue it. "It's not the normal thing for our trust to sell its land, but sometimes you have to do it," he said.

Kaulukukui emphasized that the trust still opposes the government forcing large landowners to sell property as had been done under the city's controversial 1991 lease-to-fee conversion law.

The law had allowed leasehold condo owners to force a sale of the fee if 50 percent of owner-occupants petitioned to buy the land.

In 2002, the Hawai'i Supreme Court made it more difficult for condo owners to force such sales after a ruling clarified that the 50 percent requirement applied to all owners, not just owner-occupants.

The court decision and efforts by the city to change the law led the Queen Lili'uokalani Trust to mount a successful effort that resulted in the law's repeal last year.

The trust had never been forced to sell land under the law, but has voluntarily sold land under two residential projects, Queen Lili'uokalani Village on the Big Island in 1991 and Ho-nolulu's Plaza at Century Court in 1993.

Queen Lili'uokalani, the last monarch of the Hawaiian Islands, died in 1917, leaving a will that created a trust to benefit Native Hawaiian orphans, and later other destitute children.

The trust, which operates the Queen Lili'uokalani Children's Center, last year directly served 5,180 children, and another 25,101 indirectly through other efforts.

Major projects of the trust include developing a regional shopping center on the Big Island with a partner and reinvesting in its charitable programs and facilities.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.