Waikele shopping center for sale
By Andrew Gomes
Advertiser Staff Writer
The majority owner of Waikele Center is seeking to sell its stake in the Central O'ahu big-box shopping complex, seven years after investing in the property and overseeing its management.
Jamestown, a giant Atlanta-based real-estate investment and management firm, has retained Mainland broker Eastdil Realty to market the complex, according to more than one person familiar with the planned offering who asked not to be identified to protect relationships with companies involved.
Waikele Center, which is across the street from the Waikele Premium Outlets mall, has about 25 tenants, including CompUSA, Lowe's Home Improvement Warehouse, Borders Books & Music, Chili's Grill & Bar and The Sports Authority.
The sale effort is part of a trend by Hawai'i commercial property owners trying to capitalize on a wave of real-estate investors looking to make acquisitions here because of low interest rates, the state's strong economy, rising property values and limited opportunity on the Mainland.
"Hawai'i's commercial real-estate market is on fire," said Steve Sofos of Honolulu firm Sofos Realty Corp. "It's literally like everything's for sale, and everyone — mostly Mainland investors — want to buy it."
Though it's difficult to estimate, the 522,000-square-foot Waikele Center could be one of the state's larger real-estate transactions, possibly fetching $200 million or more if sold, industry experts said.
Waikele Center, which was developed together with the factory outlet mall on former sugar-cane fields, opened in 1993 and became one of the success stories of retail despite its launch at the onset of Hawai'i's near-decade-long economic stagnation.
The project has consistently attracted value-conscious residents from around O'ahu as well as tourists shuttled from Waikiki by the bus load.
"I think there will be a lot of interest in the center," said Roger Lyons, senior vice president of retail services for CB Richard Ellis Hawaii Inc.
The local developers who created the project, Dick Gushman and Duncan MacNaughton as WCC Associates, sold the Waikele Premium Outlets mall in early 1997 to New Jersey-based outlet mall investment trust Chelsea Property Group for $76 million.
At the time, analysts said the price was the highest ever paid for a U.S. outlet mall on a square-foot basis.
Jamestown acquired its controlling interest in Waikele Center later in 1997 by helping pay off a $162 million state Employees Retirement System loan used to finance development of the center and outlet mall.
Gushman retained a minority stake in Waikele Center. It was unclear whether he intends to keep his interest or participate in the planned sale offering with Jamestown.
Gushman declined to comment, as did a representative of Jamestown. Officials at Eastdil did not respond to requests for comment.
Jamestown and Gushman own Waikele Center through a limited partnership where Jamestown is the general partner in charge of center operations.
According to property records, when Jamestown invested in Waikele Center, the limited partnership recorded the value of the transaction at $148 million.
The city for property tax purposes values the buildings and land at Waikele Center at $109 million, though real-estate experts said the true value is largely dependent on income from rent generated by tenants.
Since Jamestown's investment, the center has added retailers, including Old Navy and Ashley Furniture after losing Home Outlet and Sack 'N Save. Other tenants planning to open soon include Jamba Juice, Starbucks, Gamestop and Genki Sushi.
Jamestown, established in 1983, helps primarily German clients invest in U.S. real estate. The company owns more than $5 billion in property around the country. Waikele Center was the firm's first investment in Hawai'i.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
