Damon Estate’s former
tenants worry about
absentee owner

Some occupants are concerned
about dealing with high rent and
environmental issues

The sale of some 220 acres of Damon Estate land, most of it in the Mapunapuna and Moanalua industrial and warehousing districts, has left leasehold tenants with a new worry.

Some of them have nagged Damon Estate for years about flooding, other environmental concerns and what they consider to be excessive rents.

Now they will have to deal with Massachusetts-based HRPT Properties Trust, a publicly traded real estate investment trust, which concluded its $480 million cash purchase of the 220-plus Damon acres yesterday.

The new owner says all of that is the tenants' problem because lease and sublease terms don't make the land owner responsible for remedial work.

But HRPT, in a disclosure typical of those required by publicly traded companies, said the fact that tenants are responsible for paying for environmental cleanups and other property maintenance doesn't mean the tenants will be able to do so.

Tenants on some of the properties have long been frustrated at trying to deal with Damon. In a meeting with the Star-Bulletin two weeks ago, a dozen Mapunapuna tenants -- ranging from building owners to subleases -- voiced their complaints on condition that their names not be used.

They talked of sinking land and corrosive salt water rising above the new ground level, ruining vehicle brakes and making lower storage areas unusable. They also talked about rising rents that those who own the buildings cannot pass on to their sublease tenants because the tenants can't afford to pay.

Damon hasn't been willing to listen to their complaints, they said. Now they're worried about dealing with a new land owner, one that is thousands of miles away.

"Now we're going to have to start all over," said Ron Uemura, owner of Ron's Auto Parts/Performance, an automotive business in Mapunapuna. "The Damon Estate guys are walking distance, more or less. Can you imagine what kind of communication we'll have? (HRPT has) no office down here," he said.

Uemura's lease terms call for another 20 years, but he has been withholding rent since last month, arguing that he should not be paying for flooded ground. Uemura said he will now have to deal with a landlord that has no idea how things are done in Hawaii.

Others are taking it cautiously, acknowledging that they need to get to know the new owner.

"I'm going to wait and see what happens," said Jim York, owner of York Management, a real estate management consulting business. York doesn't own buildings in any of the Damon areas, but he has been working for some years to pull lessees together.

He helped form the Mapunapuna Sand Island Kalihi Kai Tenants Association, which represents lessees on the Damon lands.

York and the people in his association had hoped that the tenants might be able to buy their lands from Damon, but at the very least they want their rents, which are subject to adjustment every few years, to be based on the real value of the site and the level of business they are able to perform.

In other words, if business is bad they should not be forced to pay lease rents they can't afford.

HRPT, based in Newton, Mass., is new to Hawaii. Real estate observers say Damon liked the deal because HRPT was able to take all the industrial-warehouse properties in one lump, for cash.

The land, most of it mauka of Honolulu Airport on the west side of downtown Honolulu, consists of several parcels, headed by Moanalua, with more than 150 acres, and Mapunapuna, with about 80 acres.

Other pieces include 34 acres of Puuhale industrial land uphill from the airport, the eight-acre Salt Lake Shopping Center and the four-acre Pali Safeway land.

The properties were bequeathed to Samuel Mills Damon in the 1880s by a sister of Queen Liliuokalani and have been managed by the estate since Damon's death in 1924. The Damon Estate is to be liquidated and the proceeds divided among beneficiaries up the death of the last surviving grandchild of Samuel Damon, who is in her 80s.

The estate put the properties on the market in mid-2003, getting a California real estate firm, Eastdil Realty, to shop it around privately to individual clients. Damon officials did not return calls asking for comment yesterday.

HRPT Properties reported property assets of just more than $3 billion as of Sept. 30. In the third quarter, HRPT had revenues of $127.5 million, almost all of it from rentals.


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