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The Honolulu Advertiser

Posted on: Thursday, May 29, 2003

Buyer found for Maui mall

By Andrew Gomes
Advertiser Staff Writer

After months of seeking a buyer for Queen Ka'ahumanu Center, Maui Land & Pineapple Co. yesterday announced that it expects to complete a sale of Maui's largest mall by the end of July.

Don Young, acting president and chief executive officer of Maui Land & Pine, said in a statement that a purchase agreement, expected to be signed shortly, would be subject to inspection of the property and financial records.

Young did not identify the buyer, nor did he make clear whether the 50 percent stake in the mall not owned by Maui Land & Pine is included in the transaction.

Earlier this year, Maui Land & Pine and the state Employees' Retirement System, which own the center equally as Kaahumanu Center Associates, hired a real estate consulting firm to explore a sale after almost a decade of financial losses.

ERS and Maui Land & Pine officials could not be reached yesterday after the announcement.

One person familiar with the sale effort said options included one partner selling to the other, finding an investor to buy out one partner, or finding an investor to buy out both partners.

The partnership was created in 1993 to pay for an ambitious $60 million renovation and expansion of the center, which was developed on Maui Land & Pine land by Dillingham Corp. in 1972.

Maui Land & Pine, which acquired the leasehold interest in the mall in 1985, contributed the mall and land to the partnership. ERS invested $31 million. Bank loans principally paid for the balance of the project, which became the state's third-largest mall upon completion in late 1994.

In recent years, the center — with about 130 retail, entertainment, restaurant and service tenants — has struggled to attract and keep tenants and customers in what Maui Land & Pine has called an oversaturated retail market.

The center's value is difficult to peg. The partnership has a $60 million mortgage on the property. The partnership also listed total assets of about $66 million last year, though that figure often differs from market value.

The county's assessed value of partnership property is about $90 million, according to public records.

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