Saturday, May 1, 1999

Ala Moana
gets new owner

Ala Moana Center's buyers
include the firm that
already manages it

By Gordon Y.K. Pang


Retail and real estate analysts say the sale of Ala Moana Center to a consortium that includes its current managers is a good thing for Hawaii.

According to reports, owner Daiei USA is selling the 50-acre shopping center to a group that includes General Growth Properties, which manages the mall, for $820 million.

"The good thing is they are going to go forward with the redevelopment, which is a good thing for Hawaii," said retail analyst Stephany Sofos, of Sofos & Co., Ltd, a real estate consultant.

Sofos said the construction in recent years associated with third-floor expansion at the center may have hampered sales -- and thus the mall's attractiveness to investors -- but the mall remains a remarkable retail property that should rebound.

"When they finish with that expansion, they will create such critical mass it will be even more successful," Sofos said.

Martin Plotnick, a retail analyst, agreed that the sale will help bolster the local retail situation.

‘I hope the investors
are very successful because
that would cause more
investment in Hawaii’

Mitch D'Olier


"Daiei is so leveraged and in such financial straits that there is not much more that it could have done," Plotnick said.

"At least they'll stay on track with their plan. Whether or not the plan will be efficient, who knows? We'll just have to wait and see."

Plotnick said the new team will need to be more responsive to today's retail market where emphasis has shifted to big-box outlets.

"The whole consumer market, local and tourism, has shifted so dramatically in the last three to four years," he said.

A competitor for the parcel gave good marks to General Growth and is hopeful the sale will mean good news for Hawaii retail as a whole.

"They've done a masterful job, created enormous cash flow for Ala Moana and they've done a nice job bringing in tenants to Ala Moana that generate tremendous sales," said Mitch D'Olier, chief executive officer for Victoria Ward Ltd.

Victoria Ward Ltd., together with other entities, also put together a bid for Ala Moana.

"And any time a significant investor makes a substantial investment in our economy, it's good for our economy," D'Olier said.

"I hope the investors are very successful because that would cause more investment in Hawaii."

D'Olier added that it makes sense for General Growth to purchase the property.

"They have more knowledge about Ala Moana Center than any other potential buyer," he said.

"We're looking at paper. They're looking at people."

Sofos agreed. "It makes good sense for General Growth to buy it," she said. "They have a long history -- 15 years they've been with them. They know intimately the upsides of that center, as well as any potential downsides."

General Growth would not confirm the reports this morning.

"We didn't get any formal word as of yesterday," said Dexter Suzuki, marketing director of General Growth.

Daiei officials could not be reached for comment.

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