STAR-BULLETIN / FILE
Shidler Group paid $95 million for the Waikiki Galleria Tower.
Shidler Group The owners of the Waikiki Galleria Tower are considering selling the building, after holding it for less than a year and a half.
considering sale of
Waikiki Galleria Tower
The Hawaii firm bought
the building in late 2001By Russ Lynch
rlynch@starbulletin.comShidler Group, which bought the 16-story building in late 2001 for $95 million in partnership with other investors, including Hawaii's Bill Mills, said it has received approaches to buy just the retail part of the building -- the ground and second floors.
That portion should be worth more than $120 million by itself, according to Eastdil Realty, a mainland commercial real estate firm hired to help Shidler chief Jay Shidler and his investor partners decide what to do with the building.
The building, which used to be the Bank of Hawaii tower in Waikiki, has about 75,000 square feet of retail space on a long-term lease to DFS Group.
In addition, the building has nearly 86,000 square feet of office space on the sixth through 16th floors and parking on floors three through five. The office space is occupied by about 30 tenants.
Shidler Group, based in Hawaii, owns commercial property across the United States and has a history of buying and holding for the lease rental return.
The group said it had not considered "re-entering the capital market" with the building so soon after buying it in November 2001 from Nippon Shinpan, a Japanese credit card company.
However, the group has a responsibility to its investors to respond to legitimate sales inquiries, Shidler Group said in a statement, including offers for the office or retail portions of the building.
In the retail section, including 360 feet fronting Kalakaua Avenue, DFS Group made improvements worth about $65 million.
As with all improvements made to leased property, that would become the property of the building's owner if DFS should ever leave.
Eastdil Realty has been retained to "explore strategic recapitalization alternatives" for Shidler's investment in the building, the statement said. "These alternatives may include a sale or refinancing of the property."
Built in 1966, the building is "investment grade," according to commercial real estate experts, meaning that the interest and other annual costs for the capital used to buy the property are more than covered by rent from tenants.
The building is at the intersection of Kalakaua Avenue and Royal Hawaiian Avenue, in the middle of prime Waikiki real estate.
Based in New York, Eastdil Realty describes itself as a real estate investment bank that connects clients with investment opportunities.
The company, which says it has arranged deals worth a total of nearly $170 billion since it was founded 36 years ago, was acquired by Wells Fargo Bank in 1999.
