By Craig T. Kojima, Star-Bulletin
The Dole Cannery shopping complex at Iwilei.

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Cannery developer
bails out

Castle & Cooke
to take over

By Rob Perez
Star-Bulletin

The developer of Dole Cannery, the struggling retail complex in Iwilei, has reached an agreement that would turn over operations of the center to property owner Castle & Cooke Inc.

The agreement announced today calls for Horizon Group Inc. to relinquish operations to a joint venture controlled by Castle & Cooke.

Norton, Mich.-based Horizon would hold a small minority interest in the joint venture but would have no obligation or commitment to the 250,000-square-foot center's operations following closing of the agreement, according to the announcement.

In exchange, Horizon would be released from obligations under the long-term lease for the project. That lease expires in 2045.

As part of the deal, Horizon also would transfer to the joint venture its interests in a nearly 369,000-square-foot factory outlet center in Lake Elsinore, Calif., and adjacent vacant land that Horizon originally obtained for potential expansion of the center. The Lake Elsinore complex opened in 1991 and is 91 percent leased.

The joint venture also will inherit the Lake Elsinore center's indebtedness, which as of Dec. 31 was about $29.3 million.

Before today's announcement, Horizon had planned to spin off Dole Cannery and 16 other poorly performing factory outlet centers to stockholders. But that plan triggered a lawsuit by some shareholders, who called for a halt to Horizon's plan to merge with Baltimore-based Prime Retail Inc. while spinning off the 17 centers.

Perry Grueber, Horizon's vice president of investor relations, said the company expects the Dole deal to close by May. It does not require shareholder or regulatory approvals but is subject only to "customary conditions" such as checking financial information related to the deal, Grueber said.

A spokesman for Castle & Cooke could not be reached this morning for comment.

Dole Cannery, which had multi-million renovation in 1996, has been plagued by high vacancies and low customer traffic since Horizon converted the former pineapple cannery into a shopping complex.

Last year, Horizon took a $32 million write-off on the project.