STAR-BULLETIN / 1997 A new deal is in the works to transfer ownership of Victoria Ward Ltd. for a proposed $250 million. Here, shoppers and tourists stroll around Ward Warehouse.

Ward’s buyer
gives assurance
for the future

General Growth plans to
continue with the long-term
retail expansion project

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By Rick Daysog
rdaysog@starbulletin.com

The proposed $250 million purchase of Victoria Ward Ltd. reinforces the owner of Ala Moana Center's already commanding presence in the local retail market.

But some retailers expressed concerns that the popular Kakaako shopping district will lose much of its small-business focus under new ownership.

In a surprise move, Chicago-based General Growth Properties Inc. announced yesterday that it has reached an agreement with Victoria Ward to acquire Victoria Ward and its 65 acres of prime real estate in Kakaako, which includes Ward Warehouse, Ward Centre, the Farmer's Market and the new $40 million Ward Entertainment Center.

The deal -- which is expected to close by July 31 -- is the largest retail transaction in Hawaii since General Growth's $810 million buyout of Ala Moana in 1999, and offers the mall developer ownership of a teeming entertainment, shopping and dining venue to complement Ala Moana's mix of upscale fashion boutiques and department stores.

It also gives General Growth control over two of the largest blocks of retail space between Waikiki and downtown Honolulu while eliminating a competitor.

"This solidifies and strengthens Ala Moana's position as the No. 1 retail center in the world," said Stephany Sofos, president of SL Sofos and Co., a local real estate firm which specializes in retail properties.

"And they're going to protect that position as strong as they can."

John Bucksbaum, General Growth's chief executive officer, said the purchase is not a defensive move intended to block a well-financed buyer from acquiring Victoria Ward's properties.

General Growth, one of the nation's largest shopping center owners, is motivated by business opportunities, he said.

Bucksbaum said the two shopping centers -- located two blocks from each other -- are ideal complements. One is a regional mall which targets tourists as well local residents, while the other has become a local favorite with its eclectic mix of lifestyle shops, theaters, open-air restaurants and popular after-work gathering places.

"We're looking at this purely as an opportunity," Bucksbaum said. "We wouldn't spend that kind of money to gamble on buying protection."

Bucksbaum said his company remains committed to the long-term plan envisioned by Victoria Ward's management, which includes a $200 million retail expansion anchored by a 150,000-square-foot Nordstrom department store.

Bucksbaum said General Growth will continue to pursue large mainland retailers such as Nordstrom, which signed a letter of intent in November for a full-line department store.

Bucksbaum said General Growth will study other aspects of Victoria Ward's long-range strategy, such as plans to build several residential high-rises, before making a commitment.

The buyer will also take a close look at Victoria Ward's tenant mix to see what best fits into General Growth's long-term strategy. And Bucksbaum stressed that "there will always be a place for the small local retailer."

Some tenants are not convinced. Carl Ashizawa, manager of Logos Bookstore of Hawaii in Ward Warehouse, said some tenants are concerned that General Growth will bring a more bottom-line approach at the expense of the small-business focus of Victoria Ward's management.

Victoria Ward's tenants serve a different niche than those at Ala Moana, but Ashizawa asked whether General Growth will adjust their needs.

"All of the tenants are concerned about how they will be treated with the new ownership," he said.

For Audrey Fu, the purchase gives General Growth a near monopoly of the top retail locations in Honolulu's urban core.

That not only gives the company control over lease rents, but it reduces choices for local retailers, said Fu, who owns the Villa Roma women's fashion store in Ward Warehouse.

Shyrah Maurer, vice president and part-owner of Roxy Quiksilver fashion retailer, said she was optimistic about yesterday's announcement. In General Growth, the Ward properties are getting a new owner with enough capital to finance Victoria Ward's ambitious expansion plans.

"It's not like they are an outside company that's unfamiliar with the aloha spirit and the way we do things here," she said.

Mitch D'Olier, Victoria Ward's chief executive officer, said he met with tenants yesterday to answer some of their questions about the proposed deal. D'Olier noted that since General Growth is essentially buying Victoria Ward's stock, it will assume all of the Kakaako landowner's obligations, such as its debts and its leases.

Rents, meanwhile, will remain unchanged while the leases are in effect, he added.

"My message was, 'Let's give peace a chance,'" he said.