Retail

MW Group buys downtown Plaza Club

The real estate company that owns the Pioneer Plaza building in downtown Honolulu has purchased one of its star tenants.

MW Group closed on the purchase of The Plaza Club this week from ClubCorp USA for an undisclosed amount.

“I believe there is a wonderful opportunity to build on the fine legacy of The Plaza Club by continuing the benefits we are accustomed to enjoying and adding many more,” MW Group CEO Steve Metter said in a statement posted on the club’s Web site.

The company has joined with private club management veteran Rainer Gehres, who will be The Plaza Club’s chief operating officer. Club employees will be transitioned “selectively over from ClubCorp,” the company said on the club’s Web site.

MW Group also plans to renovate the club’s space on the 20th and 21st floors starting early next year.

Nothing will change for existing Plaza Club members, who were recently notified of the sale by letter. The Plaza Club also will remain an affiliate of ClubCorp, which means members can use other ClubCorp facilities around the world.

Hilo Hattie plan’s to rise from bankruptcy next month

Pomare Ltd. dba Hilo Hattie is on the path to emerging from bankruptcy next month after a federal court confirmed its reorganization plan yesterday morning.

U.S. Bankruptcy Judge Robert Faris said he was happy to see the case come to a successful conclusion.

The company expects to rise from bankruptcy on Oct. 4, according to Hilo Hattie attorney James Wagner. The emergence from bankruptcy would coincide with the beginning of a new fiscal year and would be about one year after Hilo Hattie first filed for Chapter 11 bankruptcy reorganization.

It means that the 46-year-old business’ six retail stores on four major isles of Hawaii, in addition to its Nimitz Highway headquarters, will remain open for business as usual.

But staff cuts are ahead to reduce overhead, according to court documents.

In its plan, filed in July, Hilo Hattie says it will repay its unsecured creditors 5 percent of what they are owed in equal installments over five years, without interest, beginning on the first anniversary of the day it emerges out of bankruptcy.

Another group receives 20 percent of what they are owed 30 days after emergence from bankruptcy.

The company owes from $20.2 million to $22.2 million in debts, with at least $15.5 million of that total in unsecured claims.

If the company were to be liquidated, creditors would have gotten less than they would have received under the plan, or nothing at all.

Instead of an aggressive growth strategy as envisioned by previous owner TOC Inc., Hilo Hattie plans to open one or two additional stores, including a 2,400-square-foot store at a historic beach resort hotel in Waikiki, in the near future.

Wagner said that since the lease has not been signed, he could not disclose the location.

Hilo Hattie also will focus on increasing revenue from e-commerce, uniform sales and higher-margin merchandise.

“Hilo Hattie will continue to grow, and we hope it will prosper,” Wagner said.

Donald B.S. Kang, who became chief executive officer of Hilo Hattie after stock was transferred to him in June, already has contributed $1 million from the court-approved loan to purchase more inventory for the business.

Upon emerging from bankruptcy, he’s agreed to commit an additional $2 million in capital.

Kang, owner of Royal Hawaiian Creations, a manufacturer of aloha apparel, is also expected to move his operations to the Nimitz headquarters and pay $24,000 a month in rent.

Maui Divers Jewelry, which at one time was interested in buying Hilo Hattie, withdrew its request in July and agreed to renew its concession agreement with the company.

Hilo Hattie also settled a mechanic’s lien filed by Brett Hill Construction for escalator work done at Royal Hawaiian Center, where it was originally going to open a flagship store.

For the 30-day period ended Aug. 1, Hilo Hattie recorded a loss of $573,034, and a cumulative loss of $7.6 million since filing for bankruptcy.

Hilo Hattie expects sales to stabilize and increase in fiscal year 2011 and after. Sales for fiscal years 2010 through 2014 are projected to increase to $51.9 million from about $28.8 million.

A&B Properties buys Waipio Shopping Center

Honolulu-based A& Properties, the real estate arm of Alexander & Baldwin (NYSE: ALEX) announced Tuesday that it bought the 113,800-square-foot neighborhood center in Central Oahu.

Financial details were not disclosed.

“The Waipio Shopping Center is the second property A&B has acquired in the past two weeks, in line with our core strategy of redeploying 1031 tax-exchange proceeds from earlier dispositions into quality, commercial properties with favorable growth prospects,” said Norbert M. Buelsing, president of A&B Properties, in a statement. “First developed in the mid-1980s and recently expanded, it is the primary retail and office center of the master-planned community of Waipio.”

The shopping center is anchored by Foodland Supermarket and includes Outback Steakhouse, Big City Diner, Taco Bell and Pizza Hut.

A&B Properties’ commercial property/investment portfolio now consists of 8.6 million square feet of retail, office and industrial space in Hawaii and eight U.S. Mainland states.

General Growth Properties hammered by rising vacancies

General Growth Properties posted a 2.1 percent drop in earnings, dragged down by the retail slump, rising vacancies and costs tied to its Chapter 11 reorganization efforts.

In its second-quarter earnings release, the Chicago-based real estate investment trust (Pink Sheets: GGWPQ) posted operating income of $615.8 million, down from $629.1 million last year.

Its funds from operations fell 74 percent to $58.1 million, or 18 cents per share, down from $221.6 million, or 69 cents per share. Funds from operations, which show how much money investment trusts generate from their properties, is the standard performance measure for real estate investment trusts.

The debt-laden mall owner attributed much of that decline to the sagging retail industry and its reorganization efforts. The company posted a $13.3 million drop in net operating income due to rising vacancy rates, $33.7 million in reorganization costs, and $27.9 million in additional restructuring costs including general and administrative expenses.

General Growth filed for Chapter 11 bankruptcy protection April 16. The company owns or manages about 200 malls in 44 states, some master-planned community developments and commercial office buildings. In addition to owning and managing the Ala Moana Center and the Ward Centers in Honolulu, General Growth also manages Windward Mall and Kapolei Commons on Oahu; King’s Shops at Waikoloa Beach Resort and Queens’ Marketplace on the Big Island; and Whaler’s Village and Queen Kaahumanu Center on Maui.

Source: PBN

Kauai Safeway project moves forward

Safeway has closed on its purchase of 22.8 acres near Lihue from Grove Farm and is moving ahead with plans to build a Safeway-anchored shopping center there.

Hokulei Village will feature a 56,000-square-foot Safeway Lifestyle store and 224,000 square feet of leasable space.   The plan is for the center to have restaurants, banks, office and community meeting space and a gas station.

The project won zoning approval from Kauai County in December, and Safeway (NYSE: SWY) is in talks with contractors about site work and construction. The Safeway store is expected to employ 150 to 200 people, while the entire shopping center is expected to create more than 1,000 new jobs.

“The purchase is an indication of Safeway’s commitment to proceed with the development of his important retail project, and of our optimism about the future despite the state and the nation’s current economic challenges,” said Safeway vice president Gerry Wolfe. “It speaks to the confidence we have in Hawaii and the Kauai marketplace,”

The new Safeway store will be the company’s second on Kauai; it has a store in Kapaa. California-based Safeway has 19 stores in Hawaii.

Source: PBN

Hawaii retail space tight, compared to Mainland

Despite the recession, there are fewer vacant storefronts in Hawaii than on the Mainland, according to a new report on the retail real estate market.

The vacancy rate for the state’s retail properties was 2.8 percent during the first quarter of this year, slightly up from 2.3 percent at the end of 2008, according to the retail market report from CB Richard Ellis.

Retail vacancy rates are running higher in most Mainland markets, with many in double-digits, the fallout from closures of department stores, big-box retailers and car dealers. Seattle’s retail vacancy rate stands close to 10 percent, according to a recent report by the [CompanyWatch allows you to receive email alerts with stories related to your companies of interest. <p>You can watch up to ten companies at a time.</p>] National Association of Realtors.

In Hawaii, asking net lease rents increased to $3.65 per square foot per month during the first quarter, up from $3.55 during the same quarter a year ago, while operating expenses, or common area maintenance charges, averaged $1.25 per square foot per month.

The report notes that retail rents as outlined in leases call for a base rent or a percentage of sales, which allow for rent reductions during a slow market.

“This infrastructure does provide a cushion in a declining sales environment but there are signs that this downturn will continue for the next year or two and if it does expect additional store closures and rent renegotiations to restructure leases,” the report said. “That will lead to a further erosion of rental income and this will have a negative effect on property owners and in turn their lenders.”

The retail market saw 62,324 square feet of negative absorption for the quarter, the bulk of that on Oahu, followed by the Big Island. Resort centers statewide lost 28,717 square feet of absorption, while strip centers had the highest vacancy rate at 9.4 percent.

Of the islands, Kauai had the highest vacancy rate at 5.2 percent, followed by the Big Island with 4.9 percent, Maui with 3.5 percent, and Oahu with 2.1 percent.

Source: PBN

West Oahu mall plan moving ahead

The developer of a new regional mall in West Oahu plans to select a general contractor for the $500 million project in the next 90 days.

DeBartolo Development received proposals from three Hawaii-based construction companies and is in the process of selecting one to build the regional shopping mall in East Kapolei that will be called Ka Makana Alii, according to Erin Nellis, DeBartolo’s western region development officer.

Nellis, who spoke to the West Oahu Economic Development Association’s annual membership meeting at Ko Olina Resort on Wednesday, told PBN that the company expects to break ground on the 1.5 million- square-foot project by the end of 2010, and will phase construction through 2013.

The project will create an estimated 21,000 construction jobs over more than three years, and between 3,000 and 5,000 permanent jobs, she said.

The mixed-used, open-air shopping center will include a department store anchor, an entertainment anchor that will most likely include movie theaters and possibly a bowling alley, restaurants, a fitness center, two business hotels with a total of 300 to 500 rooms and 200,000 square feet of office space, along with more than 4,000 surface and underground parking spaces on 67 acres.

The land, which is being leased from the Department of Hawaiian Home Lands, is at the corner of the new North-South Road, which will connect the mall with the H-1 Freeway, and Kapolei Parkway, both under construction. It is also along the proposed route for the city’s rail transit system currently being planned.

The project will also include a neighborhood center component, with a supermarket, drug store and national home improvement store, Nellis said. Tampa, Fla.-based DeBartolo was negotiating with the anchor tenants, whom Nellis declined to name.

Nellis said Hawaii is still a very attractive market to retailers, and noted that the weekend openings of Target, Petco and Sports Authority at nearby Kapolei Commons drew large crowds of shoppers.

“We feel like that our timing is really perfect,” Nellis said, noting that the company is planning and securing approvals during this year and next, and that retailers are not looking to expand until the economy improves. “They’re looking to 2011,” she said.

Some 90 percent of the companies working on the project will be Hawaii companies, Nellis said. A local architect will be chosen to work with a Mainland-based master planner, she said.

Source: PBN

General Growth reports $1.2B in overdue debt

General Growth Properties Inc., the owner of major retail destinations in Hawaii and the nation, had a grim showing last year.

The Chicago-based owner and manager of more than 200 malls and other developments reported about $1.18 billion in past-due debt and about $4.09 billion of debt that could be accelerated. Its lenders, however, haven’t taken action yet on that debt.

General Growth owns Ala Moana Center and Ward Centers in Honolulu.

General Growth (NYSE: GGP) also has $1.44 billion of consolidated mortgage debt and about $595 million of unsecured bonds that will mature this year that it needs to repay, refinance or extend. But “the refinancing market remains at a standstill,” the company noted in a news release.

General Growth said it is “considering all strategic alternatives” and is still talking with its lenders.

“In the event that we are unable to extend or refinance our near and intermediate term loan maturities, we may be required to seek legal protection from our creditors,” General Growth said.

The company is trying to cut costs. It has “suspended our cash dividend, halted or slowed nearly all of our development and redevelopment projects, systematically engaged in certain cost reduction or efficiency programs, reduced our workforce by over 20 percent and sold certain non-mall assets,” the release said.

As for results from retail operations, General Growth reported:

* Comparable tenant sales decreased 3.8 percent in 2008 compared to the previous year.
* Sales per square foot decreased 4.2 percent compared to 2007.
* Occupancy decreased to 92.5 percent as of Dec. 31, 2008, compared to 93.8 percent a year earlier.

General Growth’s funds from operations were $222.2 million in the fourth quarter of 2008, compared to $190.4 million in the same period a year earlier, an increase of approximately $31.8 million.

The results don’t look as good excluding funds from real estate, income from the master planned communities and benefit from income taxes. With those excluded, General Growth posted $231 million for the quarter, down from $271.2 million. Cost reductions in marketing, supplies, personnel and the like did not offset its decline in revenue, the company said.

Source: PBN

New stores open, changes under way at Ward Centers

Sports Authority is expanding its Ward Avenue store, while Pictures Plus and Marukai 99 Store will move into new spaces at other Ward properties.

The moves are among a number of changes at the Ward Centers that include new eateries and retail stores opening this year, Ward Centers said Thursday in a news release.

In4m Boardshop opened last month at Ward Warehouse selling skateboard gear and apparel, while the popular surf and skate brand Hurley opened its first Oahu retail store earlier this month at Ward Entertainment Center.

Brian’s Hawaiian Kitchen also opened this month at Ward Warehouse near the amphitheater stage, and Expressions Portrait Studio opened at Ward Warehouse on the second floor.

New eateries opening later this spring and summer include Taco del Mar, which will open in July next to Crazy Shirts at the Ward Centre street-front shops, and Blazin Steaks, which will open in the spring at Ward Warehouse next to Dairy Queen and Orange Julius.

The Ward Centre women’s boutique Misfortune, which recently closed, also plans to reopen later this month under new ownership.

Meanwhile, Sports Authority will move into the Pictures Plus and Marukai spaces this spring, adding 17,000 square feet of space to the existing store in the Ward Gateway Center. Pictures Plus will move to a space in Ward Warehouse and the Marukai 99 Store will move to the Ward Farmers Market this spring.

Ward Centers is owned by General Growth Properties, which also owns Hawaii’s largest shopping mall, the Ala Moana Center.

Source: PBN

IHOP opens second Waikiki location

A new IHOP opened Tuesday in Waikiki. Oahu’s fourth International House of Pancakes opened at 1850 Ala moana Boulevard on the ground floor of the Aqua Palms Hotel.

The 6,500-square-foot store has 80 employees. The restaurant features a private function room and an outdoor lanai dining area. IHOP has three other locations on Oahu: Windward Mall, Waikiki and Pearl City/Waimalu.

Source: PBN

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