Parker Ranch is quietly selling 3,509 acres of its North Kohala property after two consecutive years of multimillion-dollar losses by its parent organization.

The nonprofit Parker Ranch Foundation Trust, whose subsidiaries include one of the nation's oldest and largest ranches, has been hemorrhaging money despite a revised management structure, periodic land sales and having slashed its workforce by more than half since its creation in 1992.

"I think the financials speak for themselves," said Timothy Johns, chairman of the five trustees who assumed management responsibilities Dec. 31, 2007.

The trust lost a reported $18 million last year, following a $2.6 million shortfall in 2007. Since its last profitable year in 2006, the trust has burned through nearly $30 million in cash, leaving a $4.1 million reserve as of the end of last year, and saw its total assets plummet by $39 million, according to its annual reports.

Johns used only general terms to describe the financial situation of the trust, its beneficiaries and Parker Ranch Inc., the for-profit arm that runs cattle operations. Citing policy, he declined to discuss diversification or other efforts to generate a profit.

Other Parker Ranch executives either declined comment or did not return phone messages.

Details of a land sale are contained in an Aug. 31 letter obtained by the Tribune-Herald.

The letter was signed by William "Bill" Maris, who became Parker Ranch Inc.'s chief operating officer and executive vice president June 1.

$50 MILLION FOR LAND

"Parker Land Trust has entered into a definitive agreement for the sale of land for $50 million," Maris wrote.

The deal gives Parker Ranch Inc. until Oct. 25 to seek out other potential buyers willing to pay at least $51 million, which would include a $1 million brokerage commission, he added in the letter.

It doesn't identify the would-be buyer.

The sale, which Parker Ranch Inc. wants closed by Jan. 15, covers 25 parcels on both sides of Akoni Pule Highway. The contiguous parcels extend from Mahukona Beach Park north nearly to Puakea Bay Ranch.

According to a "confidential information memorandum" attached to Maris' letter, the buyer must pay at least half the purchase price in cash, agree to let Parker Ranch Inc. use the land for cattle grazing for at least five years, and return 40 percent of any profit generated should the land be resold within five years.

Asked about the documents, Johns declined further comment and restated the trust's confidentiality policy.

"We need to go with the statements he's made because I can't speak on behalf of the trust," said Diane Quitiquit, Parker Ranch Inc. vice president and spokeswoman.

The trust has not been immune to the global financial crisis, Johns said, noting that most of its 2008 losses — some $13.2 million — stemmed solely from investments.

DOING BETTER NOW

Its portfolio has experienced a "significant recovery" this year, but it's still too early to determine if the trust will end this year in the black, he said.

"I think, obviously, we'll do better than last year," he said. "I'm not sure if we will have a, quote unquote, profit."

Last year, the trust paid a combined $1.8 million to its four beneficiaries: North Hawaii Community Hospital, Hawaii Preparatory Academy, Hawaii Community Foundation and Parker School Trust Corp.

Annual distributions peaked at $8.2 million in 2006, the last year of profitability.

Cattle sales, the trust's main source of money, lost $50,000 in 2008.

"I think that we are addressing a lot of those issues," Johns said when asked about the numbers listed in the trust's 2008 annual report. "We are working on reducing our debt."

Interest payments totaled $1.4 million last year, although the trust must make a $16 million balloon repayment on a mortgage set to mature in December 2014.

"We're taking steps so that we can continue to serve the beneficiaries' needs," Johns said.

He declined to say what steps those are.

SELLING TO SURVIVE

Historically, Parker Ranch has overcome financial struggles by selling pieces of its primary asset — land.

Richard Smart, the last owner of Parker Ranch, created the trust with $10,000 cash and his vast land holdings.

"At his death in 1992, land-rich, cash-poor Parker Ranch faced a massive liquidity crisis," states background information listed on the trust's Web site, which also contains the yearly financial reports.

Estate taxes, along with attorney fees and payments to settle lawsuits by Smart's sons, created an initial $26 million debt.

"The very survival of this 150-plus-year paniolo legacy was being tested," the historical account says.

Still reeling in 1995, the trustees turned to selling land, just as Smart had done to finance ranching operations.

"Land sales to generate the best and highest return to the beneficiaries ... was another important goal set forth by Richard Smart," added the trust's background information.

At its peak, Parker Ranch owned 550,000 acres. Those holdings had dropped to 235,000 acres at the time of Smart's death in 1992, and totaled a reported 150,000 acres at the end of last year.

Parker Square, a 17,642-square-foot retail and office building in Waimea, was sold in 2001. The liquidation of Parker Ranch Center followed in 2005, and then the U.S. Army bought 24,000 acres of trust land the next year.

But the trust's strategic plan states that "land remains a core asset of the trust." The "priority is to be good stewards of the land and preserve those holdings in their natural state," the plan adds.

Johns said the trust is "constantly looking to diversify its asset base.

"We're doing whatever we can to make sure we weather this cycle," he said.