A local developer plans to divide ownership of Waikiki's iconic Ilikai hotel, after purchasing the two-tower property for more than $200 million yesterday.

Brian Anderson of Anekona Development Group said he plans to invest more than $40 million to transform the Ilikai into a hip, upscale high-rise hotel, and resell part of the property to a hotel operator and other units to individual investors.

"We will bring the Ilikai back to its former glory as a front-runner in Waikiki," he said.

Hard Rock International has explored transforming part of the Ilikai into one of its music-themed luxury hotels with Anderson, but he would not say whether that is possible or likely.

Commercial tenants said they are uncertain what their future will be under new ownership at the Ilikai. One tenant, Beverly Bates-Stone, owner of the Angel Chapel by the Sea, said she is being asked to relocate her business, which is on the pool deck of the boat harbor side of the property.

"I helped build that chapel. It's kind of my baby," she said. "I'm booked to the year 2008."

It also was unclear yesterday how the purchase would affect Ilikai employees.

Anderson bought the Ilikai's 703 hotel units and commercial areas from a Taiwan-based family enterprise that had owned the property for six years.

Anderson plans to resell 343 studios with kitchens in the main Y-shaped tower by the unit to individual investors, most of whom are expected to continue renting out the units for hotel use. Anderson said he anticipates selling the 500-square-foot studios in about two weeks for roughly $350,000 to $550,000 each.

Mark Paulson, a Waikiki real estate agent who has sold Ilikai units for more than 20 years, said privately owned renovated condos in the building have sold recently for comparable prices, but trying to sell 360 units will be an interesting challenge at those prices.

"I think over the years, they've maintained their quality," he said. "It's a neat building."

Another roughly 575 individually owned residential condos and 80 time-share units in the Y-shaped tower are not involved in Anderson's purchase.

A smaller adjacent building called the Yacht Harbor Tower has 360 hotel rooms, which Anderson said he plans to sell to an unidentified hotel operator in another week or two. Hard Rock, according to people familiar with discussions, has explored buying this part of the Ilikai. But so have other hotel companies.

Some analysts believe a Hard Rock Hotel, with a rock 'n' roll flair and catering to a younger, affluent demographic, would be a good fit in Waikiki.

The Ilikai was developed in 1964 as part residential condo, part hotel by local businessman Chinn Ho.

The property was Hawai'i's first condo, and achieved widespread recognition when the TV series "Hawaii Five-O" featured the building in its opening credit sequence that included lead character Steve McGarrett, played by Jack Lord.

"We hope to make Hawai'i proud of our transformation," Anderson said. "I think Chinn Ho and Jack Lord will be smiling."

Anderson plans to rename the Y-shaped tower The Ilikai-Where Waikiki Begins. He also said plans include adding more retail space along Ala Moana, and improving the side of the property that fronts the new time-share being built across Dewey Lane at Hilton Hawaiian Village.

Discussions are ongoing with three or four brand-name hotel operators to manage units in the Y-shaped tower, but Anderson said it's possible the property will be independently managed.

"The Ilikai is a pretty strong name," he said. "It's kind of an icon."

The Ilikai was most recently managed under Marriott's Renaissance brand. That arrangement ended yesterday. The property's new general manager is Teri Orton, former general manager of another Anderson-owned hotel, the W Honolulu-Diamond Head.

Anderson, son of prominent businessman and former state legislator D.G. "Andy" Anderson, is a longtime developer on the Big Island who in recent years has invested in hotels mainly to renovate and resell them by the room to investors as so-called condotels.

The condotel business has boomed in Hawai'i over the past five years, and has involved conversions of the Ala Moana Hotel, Diamond Head Beach Hotel, Aston Waikiki Beachside, Aston Waikiki Parkside, Bamboo Hotel and others.

Anderson has been involved in several condotel projects, including Kaua'i's Islander on the Beach, Royal Sea Cliff on the Big Island and the former Waikiki Terrace Hotel, now known as the Outrigger Luana Waikiki.