Ward soliciting buyers

By Andrew Gomes
Advertiser Staff Writer

Victoria Ward Ltd., one of the state's largest private landowners and operator of a growing retail complex in Kaka'ako, is formally soliciting buyers for the company, a move that could produce a sale of 65 acres of prime Honolulu property.

The Ward Village Shops are part of a retail/entertainment complex that Victoria Ward Ltd. has developed on its Kaka'ako land. Victoria Ward Ltd. is seeking buyers for the company. Advertiser library photo • December 2000

It was not clear yesterday whether any potential investors have submitted bids, or when such bids might be due. It also is not certain that any bid would ultimately be accepted by Victoria Ward.

Mitch D'Olier, Victoria Ward's president and chief executive officer, declined to comment last night. Ed Hustace, a Victoria Ward director and former managing director of the company, referred calls to his brother and board chairman, Frank Hustace Jr., who was unavailable for comment.

The Hustaces, along with 35 other shareholders, are descendants of Victoria Robinson and Curtis Ward, who built their home, Old Plantation, where Blaisdell Center is today. Observers note that several shareholders are aging and may want to cash out.

Analysts noted yesterday that the solicitation of bidders by an investment banking firm could be done for a number of reasons, and it does not necessarily mean the sale of a company is imminent.

They said companies can use bid solicitations to determine a company's worth, which might be useful in finding investment or development partners.

The value of Victoria Ward holdings was estimated about two years ago at $300 million. However, the current value may be closer to $200 million, analysts said.

Retail vision

D'Olier has said the company has invested $86 million in its property in the past eight years. Annual retail sales for the company have grown from $65 million in 1993 to more than $155 million at the end of 2000, D'Olier said.

According to the Credit Suisse memorandum, Victoria Ward net operating income is projected to be $25.6 million next year, a figure expected to increase by more than 5 percent annually over the next five years through growth.

Victoria Ward formed its vision in the early 1990s. Since then it has worked toward it by adding mostly retail, including Ward Village Shops, Nordstrom Rack, Office Depot, Sports Authority, Pier 1 Imports and Ross. Earlier this year, the 156,000-square-foot Ward Entertainment Centre opened with a 16-screen theater, Dave & Buster's and more retail.

Previously, Victoria Ward had much larger plans for an entertainment/retail center. In November 1997, it announced an 800,000-square-foot center to be developed with Indianapolis-based mall developer Simon Property Group. But difficulties, including Saks Fifth Avenue backing out in 1999, put that off.

No shortage of suitors

Among companies that could be interested in buying Victoria Ward, analysts said, are General Growth Management Inc., which in 1999 purchased Ala Moana Center for $800 million. Chicago-based General Growth, one of the nation's largest real estate investment trusts, manages more than 140 shopping malls nationwide.

General Growth is the nation's second-largest real estate company behind Simon Property Group of Indianapolis, which was reported to have been among bidders for Ala Moana. At the time, sources said Simon joined Hawai'i-based Victoria Ward Ltd., its partner in Ward Centre, and Alexander & Baldwin Inc. in a bid for Ala Moana.

A&B and Simon are certain to be interested in Victoria Ward, analysts said.

Yesterday, Stan Kuriyama, chief executive officer of A&B Properties Inc., said: "A&B's policy is that we do not comment on possible transactions until they are finalized. As you are aware, however, A&B has a strong continuing interest in investing in Hawai'i real estate, and we think highly of the Ward properties."

If completed, a transaction would come at a time of great change for Victoria Ward, which has steadily been advancing its redevelopment plan. The closely held private company was incorporated in 1930. Its Kaka'ako property has been owned by descendants of a single kama'aina family for more than 130 years.

Any sale or ownership change also could have a significant effect on the Kaka'ako area.

The 670-acre stretch of land between downtown Honolulu and Waikiki has been under redevelopment by the state since 1976. Since then, many plans for the area have fallen apart.

In recent months, momentum seemed to have been building, with the Legislature granting $150 million for a new University of Hawai'i medical school in the area, and Victoria Ward and Kamehameha Schools joining forces to develop a master vision for some of their plans.

Kaka'ako impact unknown

Ward's master plan for its property includes new residential high-rises, future retail phases, more parking and street realignment. In recent weeks, the company announced a $150 million to $200 million redevelopment of Ward Warehouse and a letter of intent with Nordstrom to open the company's first department store in Hawai'i by late 2005.

Jan Yokota, executive director of the Hawaii Community Development Authority, which oversees redevelopment in Kaka'ako, said it would be difficult to anticipate the effect a sale could have on development in the area.

"There are lot of question marks," Yokota said. "If the buying entity intends to keep a local presence, that is one thing. But if they don't, obviously it would change the development climate."

Local real estate experts say Victoria Ward's assets are an unusual mix of retail, industrial, office and possible future residential properties that could make it difficult for the company to attract an offer acceptable to shareholders.

Advertiser staff writer Frank Cho contributed to this report.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.