STAR-BULLETIN / NOVEMBER 2006 The Outrigger Canoe Club plans to remain at its Waikiki location for at least 46 more years after the rent terms with its leasehold landowner the Elks Lodge were settled by an arbitration panel last August.

Outrigger club buys prime sites for $13.2M

The canoe club could use the parcels to bring in rental income

The Outrigger Canoe Club has purchased a prime beachfront real estate investment near the foot of Hawaii Loa Ridge.

The $13.2 million purchase for two combined parcels at 5415 and 5435 Kalanianaole Highway closed yesterday morning, according to Mary Worrall Associates Sotheby’s International Realty, which assisted in the transaction with the help of its Japanese affiliate.

But the canoe club is not going anywhere, says club President Tom McTigue. The Outrigger Canoe Club’s lease in Waikiki is good for another 46 years.

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The Outrigger Canoe Club has made its first significant purchase for its real estate portfolio: 2.6 acres of beachfront property in East Honolulu near Kawaikui Beach Park.

The deal closed yesterday for $13.2 million, with the joint efforts of Marry Worrall Associates Sotheby's International Realty and Japan's Sotheby Realty.

"I'm very pleased for Outrigger," said Mary Worrall. "It's a nice piece of property with major beach frontage."

Two parcels combined -- at 5415 and 5435 Kalanianaole Highway -- belonged to the Goodwill Group Inc. of Tokyo.

They include a four-bedroom, two-bath main house, along with a three-bedroom, one-bath cottage and swimming pool. The property offers views of the ocean and Koko Head Crater.

But the Outrigger Canoe Club is not going anywhere, according to club President Tom McTigue.

"This is strictly an investment property for our portfolio," said McTigue. "What we will do is look for the highest and best use."

The club is not going to be putting canoes on the property, either, added McTigue, as it is zoned residential and that would not be its highest and best use.

The club is currently interviewing a number of management companies to look at the possibility of long-term rentals, he said.

Outrigger Canoe Club's membership voted overwhelmingly to approve the purchase in May, and it was announced to members on Monday night.

But the club, despite its lease dispute with its leasehold landowner -- the Elks Lodge next door -- is not going anywhere.

The Elks Lodge was seeking up to $1 million or more a year in rent from the canoe club for a 99-year lease that was to be renegotiated midway through the term.

For the first 50 years, the annual rent was a mere $30,000 until it expired on Nov. 15.

The rent terms were settled by an arbitration panel last August, though terms were not disclosed due to a confidentiality agreement.

"Our lease here is for 46 more years, and we will be here for the next 46 years," said McTigue.

The canoe club, which celebrated its 100th anniversary, has a strong membership base of about 4,200 members. To join, members today pay an initiation fee of about $15,000 and $185 a month, and there is a long waiting list.

At the time of the sale, the properties were not listed on the Multiple Listing Service, according to Worrall.

In 2006 it had been listed at one time for $15 million by Happy Land Properties, but that had since expired.

The Outrigger Canoe Club inquired about the property, and Worrall, through her Japan contacts, learned it was still available for sale.

Goodwill Group purchased the properties last November for about $13.3 million, according to county tax records, which assessed them at about $9.7 million combined.

"Beachfront property is getting very scarce here in Hawaii," said McTigue. "We figured that was probably one of the only parcels available of that size between Sandy Beach and Aiea. We thought it might be a good investment for us down the line."