Halekulani buys
beachfront land

The owner of the upscale Halekulani hotel paid more than $7 million for a portion of the Waikiki hotel's beachfront.

Halekulani Corp. outbid nearly a dozen prospective buyers for the Cenric N. Wodehouse Trust's fee interest in the Diamond Head parcel of the 455-room hotel, people familiar with the transaction said.

The deal, which closed on Friday, translates into a per-square-foot price of about $1,500, making it one of the most valuable pieces of hotel properties on the islands.

"It's a reflection of the heated real estate market," said Mike Hamasu, director of consulting and research at the local commercial real estate firm Colliers Monroe Friedlander Inc.

"Anything on the beachfront, especially in Waikiki, is going for top dollar."

Hamasu noted that the only recent fee-simple beachfront hotel to change hands in Waikiki was the W Honolulu Diamond Head. The entire 28,440-square foot hotel sold for about $8 million last August, though part of the land is leasehold.

Hamasu and Bob Hastings, president of local real estate appraiser Hastings Conboy Braig & Associates Ltd., cautioned whether the deal signals future higher real estate values in Waikiki.

Both called the sale a "unique situation" in which Halekulani had to buy the property or face the prospect of higher rents. Hastings added that another buyer could have converted the property into an upscale timeshare.

"They had Halekulani over a barrel," Hamasu said.

Tomotoshi Shiokawa, senior vice president of Japan-based Halekulani, declined comment.

According to people familiar with the deal, Halekulani acquired the Wodehouse Trust's 16.67 percent undivided interest in a 27,328-square-foot on the Diamond Head side of the property. The property includes the hotel's swimming pool and a low-rise building.

The parcel is jointly owned by about 40 separate entities, including the Mark A. Robinson Trust. The Halekulani Corp. owns about 100,000 square feet of fee interest land beneath the Waikiki hotel, which is separate from the property that sold on Friday.

The Wodehouse Trust, which advertised the property in the local daily newspapers and the Wall Street Journal, put the property on the market after Centric Wodehouse's wife, Big Island philanthropist Maude Wodehouse, died in July 2003 at the age of 87.

According to the seller's marketing documents, the Halekulani's lease was to expire in 2013 and rents were scheduled for renegotiation in 2008. Halekulani pays about $1.4 million in annual lease rents, from which Wodehouse Trust received about $235,000.