Deal near for DFS Galleria building
By Andrew Gomes
Advertiser Staff Writer
A local real estate investment firm and a New York investment fund are close to completing a deal to buy the Waikiki retail and office complex housing the new DFS Galleria.
The partnership, led by Jay Shidler and James Reynolds of The Shidler Group, has agreed to pay $90 million to $100 million for the Nicos building owned by a subsidiary of Tokyo-based Nippon Shinpan Co.
The deal is expected to close in the fourth quarter, according to Larry Taff, managing director for the Shidler Group.
Angelo Gordon & Co. of New York is helping finance the purchase. Hawai'i developer Bill Mills, a consultant to the partnership, is also expected to join the hui with an equity investment.
Takayuki Fukuda, a vice president for property owner Nippon Shinpan USA Inc., did not return a call yesterday seeking comment.
Nippon Shinpan, a credit-card services company, was expected to sell the Nicos building as one of many Japanese companies pressured by lenders to divest assets outside Japan and focus on core operations.
Last year, a major financial newspaper in Japan reported that the Tokyo company planned to withdraw from the real estate business by March 2002 and use proceeds to strengthen its credit card and loan operations as well as repay debts.
Nippon Shinpan lost $235 million in fiscal year 2000, in part because of real estate division losses. This fiscal year, which ended in March, the firm returned to profit, earning roughly $30 million.
The company bought the property at Kalakaua Avenue and Lewers Street from Bank of Hawaii in 1988 for $66 million. At the time, the bank and Woolworth were major tenants.
Recently, DFS took over the bank and Woolworth spaces and completed a
$65 million addition to the retailer's adjacent property. The DFS lease recorded in 1999 at a value of $57 million, and represents much of the value in the Nicos property for the buyers.
Shidler, Reynolds and Mills are regular investors in Hawai'i real estate. The three partnered to buy the FAA Building on the corner of Kalakaua Avenue and Ala Wai, and the nearby Eaton Square retail complex.
Shidler and Reynolds at one time owned the Waikiki Beachcomber Hotel. Their firm also owns Waikiki Marketplace and the Polynesian Plaza in Waikiki.
Mills is a partner in the upscale Maui retail center Shops At Wailea and the residential development Maui Lani.
Taff said the Shidler Group and Angelo Gordon have acquired more than $500 million of commercial real estate on the Mainland.
The Nicos building, with its award-winning, arched concrete grillwork abstractly resembling pineapple rind, was built in 1966. It was designed by Honolulu-based Wimberly Allison Tong & Goo. DFS leases 70,000 square feet in the building. There are 250 parking stalls and 10 stories of office space.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
