Campbell Estate puts Puna land on the market
By Andrew Gomes
Advertiser Staff Writer
Campbell Estate, one of Hawai'i's biggest private landowners, has put its second-largest real estate asset on the market in hopes of exchanging 28,000 acres of mostly conservation land on the Big Island for property with better income-generating potential.
The parcel, known as Wao Kele O Puna, is primarily dense forest and bare lava in the Puna district along Kilauea Volcano's east rift zone.
It is in an active geothermal subzone for which there is a mining permit, though no mining has taken place.
About 7 percent, or about 1,900 acres, is zoned for agricultural use, though none is ongoing. An 880-acre parcel nearby also is included.
The estate, which is developing O'ahu's "second city," Kapolei, said its exchange plan is part of a long-time strategy to dispose of large tracts of Hawai'i property with little earning potential in exchange for property in Hawai'i or on the Mainland that will provide the trust with income.
"We see Wao Kele O Puna as an opportunity for further diversification by converting it from a large land holding to a financial asset," said Dave McCoy, chief executive officer of the estate.
Because of the trust's legal setup, it cannot sell or buy land directly, but must exchange property to acquire or dispose of real estate assets. A buyer interested in Wao Kele, literally "upland forest," may still purchase the property, but proceeds are held in escrow until the exchange property is acquired.
Land offerings have been increasing lately as the Jan. 20, 2007, date approaches when the trust must terminate and assets are distributed to beneficiaries. But estate spokeswoman Theresia McMurdo said income-enhancing real estate trades make sense for Campbell Estate anyway.
In February, the estate put a 4,340-acre Maui parcel on the market for $6.5 million. The property, acquired by James Campbell more than 100 years ago, is leased to Kaupo Ranch for cattle. A sale would have to involve a property exchange and honor the ranch's lease, which expires Aug. 31, 2004.
The planned divestitures, according to McMurdo, are intended to diversify the estate's concentration of Hawai'i real estate, while remaining true to its roots.
"It doesn't mean we are abandoning Hawai'i," she said. "For property here or on the Mainland — all the revenues come back and fund (development of) Kapolei."
No asking price has been set for Wao Kele. The estate declined to disclose its internal valuation. An independent appraisal has not been made. For property tax purposes, the land's assessed value is $3.4 million.
Last August, 16,000 acres of undeveloped land near Hilo was sold for a little more than $10 million. Hawai'i Forest Preservation, a local company, bought about 13,000 acres. Pennsylvania-based 'Ohana Sanctuary bought a separate 3,000-acre parcel.
Doug Pothul, a broker with Colliers Monroe Friedlander, which is marketing the Campbell parcel, said value will depend on the buyer. Possible purchasers include government agencies, conservation groups, companies interested in geothermal exploration or someone looking for a wilderness residence, he said.
Geothermal exploration company True/Mid-Pacific Joint Venture signed a lease with the estate for geothermal development in 1986, but it was terminated in 1993. Pothul said the wells accessed gas at commercially nonviable levels that might be more viable with today's technology.
The state has maintained two geothermal wells drilled on the property for monitoring purposes since 1996. A geothermal license with the state expires Jan. 31, 2016.
John Michael White, president of real estate firm Hawai'i Land Co., said community opposition to geothermal mining likely would be great, leaving little commercial value for the property despite its underground resources.
White sold a 16,000-acre Hilo property for the estate of a nephew of the late Nationalist Chinese leader Chiang Kai-shek and is familiar with the Campbell property.
"It's really restricted as to what the uses are," he said, adding that its natural attributes are stunning. "There are areas of this property that if you were dropped by a helicopter there you would think you were on another planet.
"It is really quite beautiful and really quite spectacular, but from an economic point of view, it is really quite sparse."
Wao Kele is the estate's only land on the Big Island. The trust acquired the property in 1986 by exchanging an adjacent 25,000 acres with the state. James Campbell bought the 25,000-acre parcel in 1892 at public auction. The purchase was second in size to his purchase of 41,000 acres in West O'ahu where he tapped an artesian well and grew sugar.
The estate has been diversifying its assets since 1974 when it bought two small properties in California.
At the end of last year, 42 percent of the estate's real estate was in Hawai'i, compared with 51 percent for Mainland property. The remaining 7 percent awaited exchange completion.
The estate's Mainland real estate portfolio, valued at about $1 billion, consisted of 41 properties in 14 states last year. The portfolio included 8 retail centers, 8 office complexes, 22 industrial properties and three ground leases covering 9.8 million square feet — about 225 acres of space.
In Hawai'i, the estate owns 62,500 acres valued at about $1 billion.
Andrew Gomes can be reached by phone at 525-8065, or by e-mail at agomes@honoluluadvertiser.com
