A portion of the 2nd largest regional mall in Hawaii, Pearlridge Center Uptown II, was purchased on January 21, 2011 by BlackSand Capital, LLC.
We (Colliers International) represented the Seller in this transaction, which included the former J.C. Penney building, anchored by Borders and Price Busters, as well as the adjacent standalone building once occupied by INspiration Interiors.
Read the full article at Pacific Business News.
Mark’s Top 3 Picks for 4th Quarter 2010:
Off Market Deal:
Approximately 50,000 SF shopping center on Maui
Note on a larger apartment project
Please contact us for more information.
With the closing of the sale for Bishop Square (usually described as the best office complex in Honolulu), it can be said that the market for the purchase of office buildings in Hawaii is strong again. There was strong bidding for this asset which was openly marketed. There were several established bidders and a couple of major national office building owners looking to enter the Hawaii market who were competing for this asset.
The purchase of this property at roughly 50% of replacement costs will be a good purchase for this buyer and allows them to control a major portion of the marketplace in downtown Honolulu for office buildings. This buyer was well positioned and had put their “ducks in line” for a purchase like this in 2009. By first addressing existing building issues as the recession came on, they built liquid capital and credit lines to make strategic and opportunistic buys while the market was in the lower range of its natural variations.
We expect to see continued strong interest for quality office buildings in Honolulu that do come to market. There are two other office complexes under contract at this time on Oahu that will be major indicators of current value in the marketplace.
We are starting to notice more and more activity in the marketplace today here in Hawaii. A number of those deals are happening offline, off market, and before the general public has a chance to see them.
In recent conversations with my clients, we have discovered a ground lease that says ‘Sold’ and also an office complex on the west side, which will be closing in the next few days. Both of these are market rate caps or investment returns for the owners, and will provide substantially higher returns today than what was provided for buyers 24 months ago.
Recently the Kele Center, located on the island of Maui in the city of Kahalui, sold. The Shopping center is approximately 14,820-sq. ft. and sold at a price of $4,925,000. Anchored by Denny’s Restaurants, Super Cuts, Rent-A-Center, and Edward Jones, this well-located community center was a great investment for the new owners. The property is located just outside of the airport and down the road from Borders, Sports Authority, Lowe’s, and Costco. The property sits on a land area of approximately one acre. This Hawaii commercial investment will provide a nearly 10% return to the new owners of this property.
This is another example of a substantially higher rate of return (CAP Rate) than was achievable by investors just a short 24 months ago. While it did take a large equity investment in today’s financing environment, the owners will be rewarded for making a move at this time in the marketplace.
I believe 2009 and 2010 will be looked at as low points in the Commercial Real Estate cycle for Hawaii.
The Pearlridge shopping center and mall is the second largest shopping center in the State of Hawaii. This property has a great tenant mix and is well suited for the trade area it serves. Over the years, the owners and management have done a very good job of juggling tenants and providing an environment where tenants can thrive. The sales per square foot of the center are very high for similar and comparable centers. The mall is anchored by Macy’s, Sears, and a new Bed, Bath & Beyond store (the first one in Hawaii), as well as numerous restaurants.
This shopping center will sell in today’s market. It is located on a ground lease that will deter some investors in the marketplace because of the potential uncertainties of the long-term land tenure.
The past success of the center, the current tenant mix, and the strong, stable performance will attract a new owner to this property.
It is likely that that owner will reinvest in the property, as its last major renovation was over a decade ago.
For more information, please see the article from Pacific Business News:
Pearlridge Center up for Sale
Attached is an article regarding Safeway’s recent purchase of a new three acre site in the heart of Honolulu’s Commercial Real Estate Market post “Great Recession”. This site formerly housed a Cadillac dealership, which has been closed for approximately the last year. Safeway has an existing store very nearby that was not able to be enlarged, but does very high gross sales. Safeway is paying a price very close to top of the market, even prices that have not been seen in two or three years. At nearly $200 per square foot for the land, this will buoy land prices in the heart of Honolulu at least for the rest of this year. Many of us had thought that land prices would start to drop, but this single transaction shows a very motivated buyer with a known history for strong sales reinvesting in the heart of Honolulu’s population.
My top 3 picks for Commercial property in Hawaii:
The video includes more detail and a clip of the third property listed below.
1. Boutique Hotel on a large piece of Fee Simple land in a triple A location. There’s an opportunity to re-brand the hotel and the owner is looking to restructure capital stack, both equity and debt.
2. Small neighborhood shopping center on Kauai. Located near the harbor, the property is just over 90% occupied, with reasonable rents. What caught our eye was the Owner’s contract to buy the fee simple interest under the property, making it a great long term investment.
3. Warehouse in Campbell industrial park, currently occupied by Oceanic companies. Located on just over 17,000 SF of land, this 9,200 SF property includes parking, a yard area, and interior space for both warehouse and office. Currently, the property offers a 9.5% return on income from the existing tenant for 2000.
A 736-acre macadamia nut orchard in Keaau on the Big Island has been sold to Geyser Keaau Hawaii LLC, a unit of California-based Geyser Holdings, for undisclosed terms.
Geyser is not getting into farming per se, said Mark Bratton, a vice president at Colliers International.
“With an in-place farming and nut purchase contract, this is a great asset requiring minimal site management by the new owner,” he said in a statement.
Mauna Loa Macadamia Nut Co., a subsidiary of the Hershey Co., will buy the orchard’s output.
It is a “net lease deal” in which the property is leased by an operator and Geyser will be collecting rent, which “goes up a bit” every two years, Bratton said.
The orchard was sold by Keaau Macadamia Land LP and Roland and Eleanor Herberg of San Diego for estate planning reasons, Bratton said.
The purchase expands Geyser’s portfolio of commercial real estate, primarily in resort retail and hospitality, to more than $400 million.
Its Hawaii holdings include Poipu Shopping Village on Kauai and an interest in King Kamehameha’s Kona Beach Hotel on the Big Island.
KAPOLEI, HI-Locally based KDI Investments Inc. has acquired a 189,000-square-foot cold storage freezer food distribution building from Tower Plaza Associates LP for $19.2 million, according to Colliers International brokers who negotiated the sale. The property, at 91-315 Hanua St. in Kapolei on the island of Oahu, is the largest such facility in Hawaii, according to the Colliers brokers, who included senior vice president Fred Cordova in the Downtown L.A. office of Colliers along with senior vice president Mark Bratton and executive vice president Scott Mitchell at Colliers International in Hawaii.
The Colliers team represented the seller, which had acquired the property in 2006 from a related company of Foodland Super Market Ltd., Hawaii’s largest locally owned and operated grocery retailer. The property, which is located in Campbell Industrial Park, is occupied by a subsidiary of C&S Wholesale Grocers, the second-largest grocery wholesaler in the US.
The Colliers team notes that the decision to sell was based on the seller’s desire to free capital from some of its stabilized income properties. This move positions Tower Plaza Associates to take advantage of other investment opportunities, including those arising from the distressed assets. The buyer, a local family that did not have broker representation, acquired the high-yielding industrial complex to balance its portfolio of investments.
Cordova describes the 91-315 Hanua St. building as unique in terms of its size, location and use. “These features, combined with a solid tenant who has occupied the property for more than 22 years and has a significant amount of capital vested in it, provided a strong, long-term yield profile that is consistent with the buyer’s investment strategy,” Cordova remarked.
Bratton added that the buyer acquired the property at an “opportune time because of the high rates of return with an in-place credit tenant.” Considering the eventual upswing in the market cycle, “Investors will not see this type of return three to five years from now,” he said.
