Kamehameha
lowers prices
for Hawaii Kai
leasehold conversions

Homeowners at Koko Head
Villa, Heritage House and
Naniwa Gardens get notices

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By Rick Daysog
rdaysog @starbulletin.com

The Kamehameha Schools has lowered the leasehold conversion prices on several Hawaii Kai condominium projects by between 10 and 14 percent but some lessees believe the prices are still too high.

The $6 billion charitable trust last week began informing homeowners in the Koko Head Villa townhouse complex and the Heritage House and the Naniwa Gardens high-rises of the new lease-to-fee prices.

The state's largest private landowner -- which began re-evaluating its leasehold properties last year as part of a plan to exit the controversial business -- said it will unveil updated lease-to-fee prices for properties on Windward Oahu, downtown Honolulu and the central and leeward areas during the next several weeks.

"It's a step in the right direction but I don't think this will get them out of leasehold," said Michael Pang, principal broker at Monarch Properties Inc., which has represented thousands of lessees in Hawaii.

"It shows that the estate is making an effort but I don't think this is the end-all."

Sydney Keli'ipule'ole, director of the estate's residential assets division, said the average fee price in the remaining 19 leasehold units in 111-unit Naniwa Gardens complex will drop to $53,900 from the current $60,000.

The average lease-to-fee price for the 28 leasehold units in the 135-apartment Heritage House will decline to $58,400 from $65,900 while the remaining 10 lessees in the 24-unit Koko Head Villa will see the average lease-to-fee price drop to $82,600 from $96,300, Keli'ipule'ole said.

Pang said he has spoken with eight lessees in the three buildings and none of them have indicated they plan to buy at those prices.

While the new prices are down compared to conversion rates offered during the late 1990s, the lessees say the new prices aren't much changed from the original fee conversion prices offered in the early 1990s.

Pang and lessees said the new prices represent a reduction of 2.5 percent to 7 percent from the original prices. Some real estate experts estimated the estate would have to drop lease-to-fee prices by more than 50 percent to reflect the collapse of the early 1990s land boom.

The estate said its new prices are based on past sales data, appraisal information from three independent appraisal firms, property characteristics and sales practices of other lessors.

Keli'ipule'ole added the new prices for the Hawaii Kai units may not be representative of the leasehold prices the estate plans to offer for its remaining 5,000 leasehold condominium units and 350 single-family leasehold properties.

Some units will carry larger discounts while others will see a smaller reduction, he said, declining to elaborate.