Ka'ahumanu Center sold
By Andrew Gomes
Advertiser Staff Writer
A private California real estate investment firm recently formed to acquire retail centers around the country is the buyer of Maui's largest shopping center, according to several people familiar with the deal.
A purchase contract was signed Monday to acquire Queen Ka'ahumanu Center from Maui Land & Pineapple Co. and the state Employees' Retirement System, which jointly own the Kahului mall.
The sale is expected to close by the end of August, according to Maui Land & Pine's retail property vice president, Scott Crockford, who said he could not confirm or identify the buyer because of a confidentiality agreement.
Other people familiar with the transaction said the buyer is Somera Investment Partners LLC, a West Los Angeles-based firm created last October to acquire retail property. Those who spoke asked not to be identified because of a binding confidentiality agreement and because they were not authorized to speak on their company's behalf regarding the deal.
A purchase price was not disclosed, but is estimated between $70 million and $90 million.
Somera representatives did not respond to requests for comment last month and could not be reached yesterday.
Somera is a subsidiary of Santa Barbara, Calif.-based Somera Capital Management LLC, a 9-year-old company with real estate investments of more than $700 million primarily in the Western United States.
According to the company, Somera Investment aims to invest $200 million to $300 million annually in retail centers in need of repositioning or redevelopment. The firm announced in March its first acquisition with the purchase of a Victorville, Calif., regional mall for about $70 million.
Maui Land & Pine in May said it was negotiating with a potential purchaser for Ka'ahumanu Center, which for almost a decade has been a financial drain for the company and the state pension fund.
From 1995 to 2002, annual partnership net losses totaled about $18 million, or about $2 million a year, according to Maui Land & Pine annual reports.
The 572,000-square-foot center — with about 130 retail, entertainment, restaurant and service tenants — in recent years has struggled to attract and keep tenants and customers in what Maui Land & Pine has called an oversaturated retail market.
Recently, the mall signed new tenants Starbucks Coffee and Jamba Juice. An American Eagle Outfitters clothing store also is under construction. And Macy's is expected to expand with a men's and children's store next month, followed by a Macy's Home store.
Somera said it has an alliance with Madison Marquette, a Washington, D.C.-based retail real estate management and consulting firm, to assist with repositioning acquired properties. But one person familiar with the Ka'ahumanu Center deal said Somera has arranged for General Growth Properties to manage the center.
A General Growth spokesman could not be reached yesterday. If the deal is completed as expected, Chicago-based General Growth would manage four retail centers in Hawai'i, including its first on Maui and three of the four largest in the state.
General Growth owns and manages Ala Moana Center, the state's largest retail center, Victoria Ward Centers, which is third biggest behind Pearlridge Center, and Prince Kuhio Plaza in Hilo.
Ka'ahumanu Center was built on Maui Land & Pine land by Dillingham Corp. in 1972. Maui Land & Pine acquired the leasehold interest in the mall in 1985, and in 1993 partnered with the state pension fund to pay for an ambitious $60 million renovation and expansion completed in 1994.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
