Kamehameha Schools selling off residential portfolio
Kamehameha Schools has begun selling the fee-simple interest in 200 Oahu condominiums to lessees and real estate investors, as part of a larger strategy to divest all of its residential holdings.
The state's largest land trust plans to release the leased fee in another 700 island properties if the "pilot" program is successful, said Kekoa Paulsen, Kamehameha spokesman. The company retained Prudential Locations LLC earlier this year to market the fee interest, which if sold to outside investors, means that at the end of the lease term the lessor will take ownership of both the improvements and fee-simple interest in the land and control future rent negotiations.
"The lessee really is the perfect buyer," said Scott Higashi, executive vice president of sales at Prudential Locations. "Our effort really focuses on getting lessees to purchase."
The 900 total units have 12 to 47 years remaining on their leases. The asking prices for the fee interest range from $59,400 to $261,900.
"We have not offered to third-party investors all 900 properties," Paulsen said. "That would be our long-term intent ... if there is interest then we would follow that up by releasing other units for sale under this program."
Prudential has closed about 50 sales with lessees and has several more pending in escrow, Higashi said. A few investor units also are pending, though the lessee has an opportunity to acquire the units before the sale closes.
Kamehameha has offered lessees the fee-simple interest beneath the lessees' units at least five times in an effort to give the lessees the first chance to completely own their properties, Paulsen said.
The trust's total residential portfolio includes a combination of single-family and multifamily properties in Pearl City, Pearlridge, Central Honolulu, Kapalama, Kalihi, Hawaii Kai, Kailua and Kaneohe.
Kamehameha began divesting its residential portfolio in the early 1990s, voluntarily offering the leased fee interest for sale in nearly all of its projects.
Over time, the trust has gone from about 13,000 condo units in the early 1990s down to 900.
"This is the strategy that we're engaging in right now," Paulsen said. "It's another attempt in further reducing that inventory."
Proceeds from the sales will be reinvested in Kamehameha's educational programs statewide.