July 30--The recent sale of Royal Hawaiian Center, Waikiki's largest shopping complex, totaled $696.5 million, according to Hawaii Information Service.
New York-based J.P. Morgan Asset Management, an affiliate of banking giant JPMorgan Chase & Co., purchased the sprawling center from Kamehameha Schools, the local trust that funds education for Hawaiian children.
The transaction, which closed June 12, includes the mall buildings but not the underlying land. Kamehameha previously announced the sale but would not disclose a price or other terms of the deal.
"It achieved a high-water mark for a retail property in Waikiki, demonstrating the strong demand for investment properties in Hawaii," said Mike Hamasu, consulting and research director at Colliers International. "I can't imagine anywhere else would sell for $2,165 a square foot."
The trust retained broker Eastdil Secured to find a buyer for the center in October and at that time said it might offer a 60-year ground lease, at the end of which Kamehameha Schools would recover complete ownership of the property.
Kamehameha Schools developed Royal Hawaiian Center in 1981 on three blocks fronting Kalakaua Avenue. About seven years ago it invested $115 million to transform what was a four-story, fortresslike structure with concrete finishes and tenant vacancies as high as 40 percent into a modern-looking center with new tenants including Apple, Cheesecake Factory, Forever 21, Hermes and Tory Burch.
Los Angeles-based Festival Cos. is expected to continue managing the mall, which has about 110 shops and restaurants.
Proceeds from the mall's sale will be reinvested and used to support Kamehameha Schools operations, which besides education include conservation land stewardship and major real estate development projects in Haleiwa and Kakaako.
Royal Hawaiian Center was the single biggest asset of Kamehameha Schools, which previously said it considered a sale as a way to diversify and reduce risk in its roughly $9 billion investment portfolio.
The trust also has offered to sell Hawaii Kai Towne Center and Windward Mall in Kaneohe in similar ground-lease deals as part of the diversification strategy.
Windward Mall, with 530,000 square feet of retail space, is the third-largest shopping center on Oahu. Hawaii Kai Towne Center is a 30-acre complex that includes Costco, two office buildings, a self-storage facility and a retail shopping and dining center.
The value of these two properties combined has been estimated at between $275 million and $400 million.
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