News Column

Site sold for $696.5M

July 30, 2014

By Kristen Consillio, The Honolulu Star-Advertiser

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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Source: Honolulu Star-Advertiser (HI)

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