Investment

Castle & Cooke sells prime site with long term lease to Home Depot

Texas company buys prime site from Castle & Cooke

Castle & Cooke Hawaii quietly sold a prime plot of land in Honolulu — specifically, the nine acres on which sits the Home Depot store in Iwilei — to a Texas company for $23.2 million this summer.

The buyer, identified in the deed as HD Hawaii 421 Partnership Ltd. of Houston, is said to have been interested in buying the property for several years.

Castle & Cooke marketed the property several years ago, and ultimately sold the land at 421 Alakawa St. fee simple to the HD Hawaii partnership, whose president is Howard B. Chapman.

No word on how interested Home Depot might have been in buying the land underneath its Iwilei store, which opened in 1999. Home Depot’s long-term lease on the property runs through Jan. 31, 2025, according to the deed. No real estate brokerage firm represented the seller or buyer.

At $23.2 million, the sale ranked No. 7 on PBN’s commercial real estate transactions list, which listed the biggest deals closed between July 1, 2009, and June 30, 2010.

“It’s a really big deal because there just hasn’t been much out there and my guess, though not knowing the buyers, they probably own some other Home Depots on the Mainland or felt comfortable with the tenant to make the deal,” said Steve Sofos, president and CEO of Sofos Realty Corp., who was not involved in the sale. “I think [the sale] is surprising because I always thought that for Castle & Cooke, that was one of their crown jewels.”

Source: PBN

Amerasian Land Co Inc. Sells Pepper Tree Apartments

Pearl Dragon LLC has purchased the Pepper Tree Apartments from Amerasian Land Co. Inc. for $5 million.

The Aiea apartment complex consists of 40 two-bedroom units and eight one-bedroom units that are 95 percent occupied, according to Doug Davis Realty, which represented the buyer.

Sale of Pepper Tree Apartments closed on July 30.

Source: PBN

Hawaii Commercial real estate market shows signs recovery

Oahu’s commercial real estate market is showing signs of recovery, but it could take at least another year before it is back on firm footing.

That’s the assessment of leaders of three large Hawaii commercial real estate companies as the industry moves into the final five months of the year. With commercial real estate taking a beating as Hawaii and the rest of the world struggled to survive the global recession, industry leaders here believe that the worst is likely over and recovery is on the horizon.

The impact of the financial crisis is evident in the dramatic decline in commercial real estate transactions over the past four years. In the first quarter of 2006, there was $1.4 billion in transaction activity, 88 percent higher than the first quarter of this year, said Mike Hamasu, consulting and research director at Colliers Monroe Friedlander.

“Financing is the lifeblood of the investment market,” Hamasu said. “If you can’t get money to purchase or develop your properties, it makes it very difficult to move forward on hardly anything.”

But he said there are signs that the commercial real estate industry is improving.

The industrial and retail markets are stabilizing, with retail vacancy rates hovering around 3 percent. Hamasu said there appears to be increased interest in real estate investment, but office market vacancy remains about 4 percentage points higher than it was two years ago.

Hamasu said he’s optimistic that the worst is over, but said it will take a while before the recovery is complete.

“We’re starting to see a slow transition from a market that’s been fairly devastated to one that’s starting to consider real estate as an opportunity,” he said. “The optimistic people are saying the bottom has hit, but the pessimistic ones are saying we haven’t had enough proof yet to say that.”

Steve Sofos, CEO of Sofos Realty, agreed that commercial real estate activity picked up in the latter part of 2009 into early 2010, but he said the market is still flat. He said he believes this trend will continue through 2011 because of the long-lasting impact of the recession.

“The problem is there is no pent-up demand in the office market, there’s no pent-up demand in the industrial market, there’s no pent-up demand in the retail market,” he said.

He said one solution would be for landlords to adjust their lease rents to make them more affordable and attractive to small businesses. He said owners need to decide if they want to maintain rents, but deal with vacant property, or lower rents and have an income from their tenants.

“The smart landlords are wheeling and dealing to get tenants,” Sofos said. “The bad ones are sitting there and holding their prices.”

Joseph Haas, president and senior managing director of CB Richard Ellis, said the commercial real estate market in Hawaii is “fundamentally strong.” He said there still is some softening in the office market sector in Honolulu, but that the retail market is tightening and the industrial market has bottomed out.

Haas said he believes the worst is over for the industry, although he acknowledged there still is a lot of uncertainty. The key, he said, is the need for marked improvement in the Hawaii job market.

“We haven’t had job growth, which directly affects commercial real estate,” he said. “You don’t need to expand your office if you’re not bringing new people on. We won’t know we’re out of the woods for sure until we see positive job growth.”

He added that one positive sign that commercial real estate is on the rebound is the recent purchase of Bishop Square by Douglas Emmett Inc. The California-based real estate investment trust bought the downtown property for almost $230 million.

“If you want to make a statement that the commercial real estate industry is strong in Hawaii, that’s putting your money where your mouth is,” Haas said. “There’s only one Bishop Square, unfortunately. But they are a Mainland real estate investment trust who believes in our market and the future of our market.”

Source: PBN

Hawaii commercial real estate sales drop

Investors spent a little more than $122 million on commercial real estate in Hawaii during the first quarter of this year, which was $12 million, or 9 percent, less than commercial sales a year ago, according to a new report.

There were just 17 transactions of $1 million or more during the first three months of 2010, according to the report released Friday by Colliers Monroe Friedlander.

The report attributed the low number of sales to investor cautiousness, tighter underwriting, tenant demand and seller hesitancy, but also noted that capitalization rates are expected to increase.

The report forecasted that commercial investment sales will begin to increase over the next few quarters as investors capitalize on a buyer’s market, and that the market recovery will happen slowly over the next two to three years.

One of the most notable transactions early in the year was Alexander & Baldwin’s $50 million sale of the Mililani Shopping Center to Stoneridge Capital partners.

The foreclosure sale of the former Hawaii Raceway Park in Kapolei to a group of investors called AC/CW Raceway Owner LLC for almost $14 million was another notable sale, but was also at a price of about $5 per square foot, which was significantly below the $35 to $40 per square foot that land was commanding at the peak of the market, the report said.

Source: PBN

Douglas Emmett to buy Bishop Square

Douglas Emmett Inc. has been selected to purchase one of downtown Honolulu’s largest office complexes.

The Santa Monica, Calif.-based real estate investment trust is paying more than $200 million for Bishop Square, two towers that together measure 920,000 square feet, according to sources familiar with the deal.

According to city tax records, the property’s assessed value is $244.8 million. It was sold for $160.6 million to Bishop Square Associates in October 1989.

The towers at 1003 Bishop St., which have approximately 200 tenants, are being sold by New York brokerage firm Eastdil Secured LLC.

The property, owned by Northwestern Mutual and the California Public Employees’ Retirement System, was put on the market early this year in an open-bid process.

Douglas Emmett beat out The Shidler Group for the property, which includes the 30-story American Savings Bank Tower — formally known as Pacific Tower — built in 1972, and the 28-story Pauahi Tower, which was completed in 1983.

The deal is expected to close this summer, following a due-diligence process.

Calls to Douglas Emmett weren’t returned.

The REIT also owns the 25-story Bishop Place, a 472,569-square-foot office building at 1132 Bishop St.; the 31-story Harbor Court, measuring 206,768 square feet, at 55 Merchant St.; and the Honolulu Club, a 78,297-square-foot office building at 932 Ward Ave., named after a private membership athletic and social club.

Douglas Emmett also owns Moanalua Hillside Apartments, a 696-unit apartment complex at 1229 Ala Kapuna St.; and the Villas at Royal Kunia, a 402-unit apartment complex at 94-994 Eleu St. in Waipahu.

Source: PBN

Waikoloa Highlands Center for sale $19.9M

Waikoloa Highlands Center on the Big Island is on the market for $19.9 million.

The neighborhood shopping center, measuring 73,524 square feet, has 43 tenants and is anchored by Waikoloa Village Market, a subsidiary of KTA Super Stores.

Owner 3-D Investments of California has traded offers with four prospective buyers, according to property broker Mark Bratton, who expects to sell the shopping center this summer.

Other tenants include Chevron, First Hawaiian Bank, Hawaii Family Dental Center and Subway, as well as a number of doctors and dentists.

The center is 76 percent occupied, even though Hilton Grand Vacations left a significant amount of space vacant after consolidating operations about 18 months ago.

Source: PBN

Waikiki Retail Building For Sale Fee Simple

The Waikiki building that is the home to the wildly popular eatery Eggs ‘n Things is on the market for $6.2 million.

The building on Saratoga Road is part of a three-building complex totaling 4,705 square feet on a fee-simple parcel that measures 4,870 square feet.

It’s owned by real estate investor Jay Shidler and his business partner, Ronald Petty. CB Richard Ellis has the listing.

Eggs ‘n Things moved from its former home at 1911-B Kalakaua Ave. to the Saratoga Road site in November 2008 in part to be closer to its Waikiki tourist base, especially visitors from Japan.

The building’s other tenants include Hawaii’s Natural High.

Source: PBN

Denver company to purchase Hotel Hana-Maui

A Denver-based real estate investment and development company plans to enter the Hawaii market with the purchase of the Hotel Hana-Maui & Honua Spa, an award-winning luxury property located on Maui’s eastern coast.

Amstar Group LLC said yesterday it expects to take possession of the AAA Four Diamond Award property in May after its deal with the current owner, Ohana Hotel Co., closes for an undisclosed amount. An Amstar subsidiary, Green Tea LLC, will take over management of the iconic 70-room hotel, which opened in 1946 and earned numerous industry accolades last year, including two Travel + Leisure Magazine “World’s Best Awards.”

“We are choosing to invest in the Hotel Hana-Maui because we recognize Hana as a special place,” said Joy Berry, president of Green Tea LLC. “Our efforts will be focused on travelers who have an interest in ‘doing,’ offering them a wide variety of activities and providing them with a memorable experience in a memorable place.”

Approximately 200 hotel workers, some of whom are represented by the Unite Here! Local 5 union, were notified in January that they could lose their jobs as a result of the asset sale. A spokeswoman for the company said workers will be laid off by Ohana when the deal closes and will have to reapply for jobs with Green Tea, which will host an employment fair for displaced workers and community job-seekers in the next few weeks. However, Amstar’s immediate repositioning strategy will reduce jobs by eliminating positions and outsourcing.

“A change in the existing operational model is critical to turning the hotel around and into a viable operation,” Berry said.

The fate of the hotel, which had gone on the market for between $60 million and $70 million in 2007, had been uncertain for some time. Owners took it off the market in the summer of 2008 when the national credit crunch and global downturn went into full throttle, and San Francisco-based Passport Resorts LLC, the property’s minority owner, sold its stake at the beginning of last year to a majority group of California investors in Ohana Hotel. In the last year or so, Hotel Hana-Maui, along with many other neighbor island properties, had seen occupancy drop between 25 and 30 percent.

State Sen. J. Kalani English (R, Hana-East and Upcountry Maui-Molokai-Lanai-Kahoolawe), whose first job was at Hotel Hana-Maui, welcomed Amstar to Maui.

Although Amstar is new to Hawaii, its $2 billion portfolio includes a mix of office, multifamily and hospitality holdings.

“All of Hana has experienced the uncertainty surrounding the Hotel Hana-Maui’s financial condition, and I think we are all extremely satisfied with the plans we have seen for the hotel’s future,” English said.

Although hotel jobs will be lost under the new ownership model, English said following a meeting with Amstar executives that he is “comfortable that they intend to be good corporate neighbors and focus on having a positive impact on our community.”

Source:  SB

A&B Properties Acquires Kailua-Kona Shopping Center

Acquires Favorably Priced, Well-Located Center with 1031 Proceeds

HONOLULU, Apr 12, 2010 –A&B Properties, Inc., the real estate subsidiary of Alexander & Baldwin, Inc.(NYSE:ALEX) (“Company”), announced today that it has acquired Lanihau Marketplace (“Lanihau”), an 88,300 square-foot neighborhood shopping center in Kailua-Kona, on the Big Island of Hawaii. A&B Properties previously sold the center to its current owner in 2006. The Lanihau acquisition represents the Company’s third improved property acquisition in Hawaii, and sixth overall, in the past 12 months.

“We continue to take advantage of favorable market conditions to expand our Hawaii improved property portfolio with the acquisition of Lanihau Marketplace,” said Norbert M. Buelsing, president of A&B Properties. “We sold Lanihau at a good point in the market cycle, but we’ve always liked the center. Lanihau remains a very popular shopping destination for the Kailua-Kona community – as demonstrated by its 99 percent occupancy and strong, stable long-term tenants, including Sack N Save, Longs Drugs, Bank of Hawaii and American Savings – and we are fortunate to have this opportunity to add this property back to the portfolio.” Lanihau was acquired in a 1031 exchange transaction, using proceeds from earlier dispositions.

Located along the Big Island’s west coast in the heart of Kailua-Kona’s regional retail center, Lanihau is ideally situated at the intersection of Queen Kaahumanu Highway and Palani Road, one of the busiest intersections in Kona.

With the acquisition of Lanihau, A&B Properties’ commercial property/investment portfolio consists of 8.4 million square feet of retail, office and industrial space located in Hawaii and eight U.S. mainland states. Additional information about A&B Properties, Inc. may be found at its web site: www.abprop.com.

About Alexander & Baldwin: A&B is headquartered in Honolulu, Hawaii and is engaged in ocean transportation and logistics services through its subsidiaries, Matson Navigation Company, Inc., Matson Integrated Logistics, Inc. and Matson Global Distribution Services; in real estate through A&B Properties, Inc.; and in agribusiness through Hawaiian Commercial & Sugar Company and Kauai Coffee Company, Inc. Additional information about A&B may be found at its web site: www.alexanderbaldwin.com.

Statements in this press release that are not historical facts are “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement.These forward-looking statements are not guarantees of future performance.This release should be read in conjunction with our Annual Report on Form 10-K and our other filings with the SEC through the date of this release, which identify important factors that could affect the forward-looking statements in this release.

SOURCE: A&B Properties, Inc.

Local Developer Donates 300 acres to Kamehameha Schools

Developer Jeff Stone has donated 300 acres of land to Kamehameha Schools and the state Department of Hawaiian Home Lands for massive projects that are expected to transform the Leeward coast.

Kamehameha, the state’s largest private landowner, expects to invest $100 million to build an educational complex on approximately 70 acres of vacant land. It will be called the Stone Makaha learning complex and likely consist of a multi-generational learning campus for children and their families.

Possible elements could include a community service center, as well as a performing arts center, learning hall, taro patch and indigenous gardens.

Meanwhile, DHHL plans to develop a new Hawaiian homestead community — estimated between 400 and 600 homes — on the 230 acres adjacent on three sides to the Kamehameha parcel.

Over the course of development, the project is estimated to cost several hundred million dollars, according to DHHL spokesman Lloyd Yonenaka.

Construction of the educational campus, which will occur in phases, is expected to begin in 2012. Build out of the Makaha project is projected to take 15 to 20 years.

Source: PBN

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