Kamehameha Schools updating property prices

By Andrew Gomes
Advertiser Staff Writer

Kamehameha Schools is hiring three independent real estate appraisal firms to update prices for about 5,500 leasehold residential properties available for purchase by homeowners.

The new prices, expected to be released in February, will be the first time the trust, formerly known as Bishop Estate, has appraised its entire portfolio of residential properties since 1991, when land values were generally much higher.

But local real estate experts said the updated prices won't necessarily be lower.

A lot depends on terms of the ground lease, including the schedule for adjusting lease rent and how much time remains on the lease, as well as the fee values in the area.

"It really depends on the underlying characteristics of an individual property," said appraiser Jan Medusky of Medusky & Co. Inc.

Kekoa Paulsen, Kamehameha Schools spokesman, said repricing of residential leased-fee assets is part of a requirement to keep updated values for the trust's entire asset portfolio as mandated by Probate Court.

In May, the trust imposed a moratorium on fee sales.

Paulsen said the trust will not push residential leased-fee sales, but will continue to sell to homeowners expressing interest. Lessees will be informed of adjusted prices by letter.

In the past, critics have complained that the estate was charging exorbitant prices for its lease-to-fee conversions. Residential real estate prices have plunged 25 percent or more in the past decade, and many homeowners demanded lower prices.

To determine fair market values, Kamehameha Schools is contracting with three local appraisal firms. The trust did not identify the firms, but industry sources said they are Stellmacher & Sadoyama Ltd., The Hallstrom Group Inc. and John Child & Co. Inc.

Stellmacher confirmed their participation in the program.

The Hallstrom Group declined comment.

A representative of John Child could not be reached.

Kamehameha Schools used to own the land under about 15,000 single-family homes and the leased-fee interest in nearly 13,000 multi-family units, mostly on O'ahu.

The estate was forced to sell those assets in the mid-1980s. The sales raised billions of dollars that were reinvested, transforming Kamehameha Schools from a land-rich, cash-poor estate into a $6 billion trust.

Of the 5,500 leasehold residential assets remaining, roughly 5,000 are single-family and 500 are multi-family properties.

The trust did not disclose the total last-appraised value of its residential assets.

Kamehameha Schools plans to redeploy proceeds from residential leased-fee sales to other types of assets in a continuing effort to diversify its investment portfolio.