A&B buys Honolulu
Daiei land

The firm points out
the property could be
rebuilt into a high-rise
someday

Alexander & Baldwin Inc.'s real estate arm paid $19.3 million for the land beneath Daiei Inc.'s Honolulu store.

A&B Properties Inc. said yesterday that it completed its purchase of the fee-simple interest in the 176,000-square-foot property near Ala Moana Center from CEC Hawaii Inc.

Japan-based Daiei operates a 105,000-square-foot store at the Kaheka Street property and its lease does not expire until 2018. But Alexander & Baldwin's chief executive, Allen Doane, hinted that the property could be redeveloped.

"This is a rare opportunity to acquire a large, fee-simple parcel in Honolulu's urban core," Doane said. "Importantly, the property is fully entitled for a broad range of commercial and residential uses, including high-rise development use, thereby creating some very attractive redevelopment options over the longer term."

The sale does not include the nearby two-story parking lot used by Daiei patrons. Daiei leases the lot from several landlords and it will remain available to Daiei customers, A&B spokeswoman Linda Howe said.

Howe said the location will generate "an acceptable investment return" whether it remains as a retail property or is redeveloped for residential and commercial uses.

The deal comes as Daiei faces new competition from Wal-Mart and Sam's Club, which opened a 315,000-square-foot double-decker store on Keeaumoku Street last year. It also comes as the retailer's bankrupt parent has struggled in Japan with more than $9 billion in debt.

A Daiei spokeswoman could not be reached for immediate comment. But the company recently told the Star-Bulletin that sales at Daiei's four island locations were up 4.7 percent in 2004 from a year earlier.

"The parent company is struggling right now, but it doesn't affect us," said Theresa Chang, sales, promotion and advertising manager. "As long as we are making a profit and we are doing OK, we have no problem."

A&B said it financed the deal using the tax-deferred proceeds of its $17.8 million sale this month of the Ontario Pacific Centre in California.