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Ward contractor sues General Growth for $16M


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POSTED: Thursday, November 13, 2008

The contractor for Ward Village Shops filed a nearly $16 million lien yesterday against General Growth Properties Inc., which is facing bankruptcy if it fails to refinance or extend nearly $1 billion in debt.

The lien filed in state Circuit Court by Albert C. Kobayashi Inc. claims that the contractor performed work at “;substantial additional costs above the original contract amount”; to improve the Ward properties but has not been paid for services, labor, materials and equipment now totaling $15.95 million.

Representatives of Kobayashi and its attorney, Harvey Lung, could not be reached for comment yesterday.

Despite financial troubles that have forced the nation's second-largest mall owner to put properties on the market and cut costs, General Growth still plans to pursue approvals for its Ward Neighborhood Master Plan - a massive redevelopment project that would transform the entire Kakaako skyline.

“;Our plan for the Ward neighborhood sets the course for the future, no matter the developer,”; said Jim Graham, company spokesman. “;Approving the plan now sets the stage for development later when the economy improves.”;

It is the largest Hawaii project for the troubled real estate investment trust, which saw shares plummet this week after warning that it faces solvency issues and might default on certain debt obligations.

The Ward plan, scheduled to be implemented over 20 years, would demolish most of the existing buildings at Ward and add up to 4,300 residential units in a mix of mid- and high-rises throughout the 60-acre neighborhood.

The Hawaii Community Development Authority, which oversees redevelopment in Kakaako, is scheduled to make a decision on the master plan in early December.

On April 5, 2006, Kobayashi signed a $17.8 million construction agreement with General Growth for services related to the development of the Ward Village Shops at Ward Centers.

General Growth has delayed or slowed work due to market conditions at several projects throughout the country, though it did not specify which ones.

General Growth's stock, which has fallen 99 percent this year, was removed by Standard & Poor's from the S&P 500 index yesterday because the mall owner's market capitalization of $93.9 million ranked it last in the index. It was replaced by drug developer Cephalon Inc.

“;We are hopeful that we can address the company's financial obligations through the strategies we have outlined,”; including the sale of core and noncore assets, joint ventures, a corporate-level capital infusion and strategic business combinations, Graham said. “;We intend to continue evaluating our construction schedule as economic conditions evolve and our financial issues are resolved.”;