Deal speeds Maui project

By Andrew Gomes
Advertiser Staff Writer

Under agreements being finalized, Hawaii Land & Farming will sell 110 of its 540 developable acres to local homebuilder Schuler Homes, California developer Paul Quong, the Hawai'i unit of Canada's Brookfield Properties Corp. and two investment firms for $27.5 million.

A foreclosure auction that had been scheduled yesterday was postponed to provide extra time for the transactions to close by the end of the year, said Stanford Carr, the Honolulu developer who led a $24 million buyout of Hawaii Land & Farming three years ago.

If executed as planned, the development deals would eliminate Hawaii Land & Farming debt, and accelerate building at the community near Wailuku.

"This creates a lot of diversity," Carr said. "We've straddled product types to complement one another and create a synergism — to create options for buyers and have a lot going on at the same time."

Carr said he plans to build entry-level town houses, moderately-priced single-family residences and higher-end homes and lots on four parcels totaling 60 acres being sold to investment firms Strand Capital Corp. and Hearthstone.

Schuler is buying 29 acres for development of 140 to 150 single-family homes in the low- to mid-$300,000s, according to the company's Hawai'i division President Mike Jones.

Quong is buying 10 acres to build a neighborhood commercial center with a supermarket, drugstore and other retail and service businesses, Carr said.

And Brookfield is buying 10 acres for what would be its second project in Hawai'i, about 100 duplex or town house units ranging in price from the high $200,000s to low $300,000s.

"I think the dynamics are there," said David Murphy, development director for Brookfield Homes Hawaii. "The Kihei and Wailea areas are being saturated, and in the Wailuku area there is an economic employment base and there is a lack of new home product. Now is an opportune time to begin."

If all four projects at Kehalani go forward around the same time as anticipated early next year, it would boost Central Maui's housing inventory and significantly add to the community. A total of 2,000 homes to be developed over 10 to 15 years at an estimated cost of $500 million to $600 million is envisioned for Kehalani.

Patrick O'Neill, principal broker of Carr's in-house brokerage company Pacific Island Realty LLC, said a tight inventory dominates Central Maui real estate, where the average sale price for a home has risen 14 percent, to $302,000, for the year through Aug. 31 compared with the first eight months of last year.

"The market remains very healthy, very strong," O'Neill said.

Hawaii Land & Farming had suffered from a weak housing market in the early to mid-1990s, and the former spinoff of C. Brewer & Co. was delisted from the Nasdaq stock market in 1998.

Carr with two other partners bought the company for $4 million plus the assumption of roughly $20 million of debt in December 1999.

Bank of Hawaii filed a foreclosure suit to recover $10.6 million in delinquent loans, and a Maui judge ordered an auction of Hawaii Land & Farming assets, including Kehalani's 700 acres (including preservation land), a couple hundred acres on the Big Island, about 60 acres on Kaua'i and at least 100 acres on Maui.

The bank filed its lawsuit in September of last year, and a judge earlier this year ordered Hawaii Land & Farming assets be sold at auction. By completing the voluntary sales of selected assets, Carr said the company will be able to retain remaining parts of Kehalani and its other assets.

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