Thursday, June 17, 1999

Isle investors purchase
two Oahu properties

By Jerry Tune


Local investors have purchased the Hawaiian Life Insurance Building near Ala Moana Center and the Times Square Shopping Center in Pearl City in separate transactions that the sales agent said illustrate a turnaround in the local commercial real estate market.

Scott Mitchell of real estate company Colliers Monroe Friedlander Inc. said both properties were being held as investments for cash flow and no redevelopment plans are under way.

KJL & Associates, headed by Warren Luke, president of Hawaii National Bank, purchased the Hawaiian Life building at 1311 Kapiolani Blvd. from System Land USA Inc., a division of Ace Kogyo Co. of Japan. The price was $5.8 million, much less than the listed price of $10 million and the $12.7 million that System Land USA paid for it about 10 years ago, Mitchell said.

Luke said the purchase was "a long-term investment."

Times Square Shopping Center Inc., headed by developer Stanford Carr and former Amfac executive Howard Hamamoto, purchased the Pearl City property at 98-1254 Kaahumanu St. for $10.35 million. Listing price was $12.5 million.

Mitchell said the deal was actually a stock transfer, the sale of FWF Land Corp., a single-asset corporation.

"In the last six to nine months we have been experiencing a positive change of attitude about Hawaii property," Mitchell said. "A lot of mainland companies view Hawaii as a turnaround candidate."

The seven-story Hawaiian Life building, constructed in 1954, includes 41,500 square feet of rental space and 39,625 square feet of land. Mitchell said the Hawaiian Life building is considered to have greater value today as a rental income stream rather than for redevelopment.

Other properties along Kapiolani Boulevard are better candidates for redevelopment, he said.

Developer Jack Myers this week announced that Myers/Daiichi Midtown Partners sold about two acres of land at Kapiolani Boulevard and Ward Avenue to the MacNaughton Group.

The new owners are considering retail and condominium options. The land is now used for parking. The Myers property sale has not closed yet but the price reportedly was less than the $40 million that Myers paid for it.

Mitchell said other Kapiolani Boulevard land recently has been selling at $90 to $95 a square foot, prices last seen in the mid 1980s. Appraisers say the correction in land values could spur construction of two-story buildings put up for interim use on the property.

"These uses can be retail and could include office on the second level," said Hugh Howell, appraiser and owner of Howell & Associates. "It's the path of least resistance."

Howell said he thinks this can happen in the range of $80 to $100 a square foot which is far below the peak of the market when buyers from Japan paid more than $300 a square foot. He said in the mid 1980s, Kapiolani Boulevard values ranged around $80 a square foot. "We've been seeing a lot of sales which show we are getting back to that level," Howell said. "It's like a bell curve. The land has corrected out; it's almost at complete equilibrium."

The Times Square Shopping Center has 55,600 square feet of building on 175,000 square feet of leasehold land. Lessors are Times Square Super Market Inc. and Edward Y.F. Pseu. Mitchell said the center is more than 90 percent leased.

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