Posted on: Friday, September 24, 2004
Waikele Center purchased
By Andrew Gomes
Advertiser Staff Writer
Central O'ahu's big-box shopping complex Waikele Center has changed hands in a sale to a private California real-estate investment firm that owns several Mainland shopping centers.
San Diego-based American Assets Inc. bought the popular 522,000-square-foot property from another big real-estate investor, Jamestown, an Atlanta-based firm that helps primarily German clients invest in U.S. real estate.
A purchase price was not disclosed but was close to $210 million, according to more than one person familiar with the deal.
The sale is one of the state's larger real-estate transactions by price and involves a property with about 25 tenants, including Lowe's Home Improvement Warehouse, Borders Books & Music, CompUSA, Chili's Grill & Bar, Kmart, OfficeMax and Ashley Furniture.
John Chamberlain, American Assets' chief executive officer, said the center has one parcel that could still be developed, but that his company has no immediate plans to pursue that.
"At present, we plan on continuing to operate the center in a first-class manner," he said.
American Assets owns seven California shopping centers, plus one each in Arizona, Texas and Nevada. The company, established in 1967, also owns 1.6 million square feet of office space and 1,000 residential rental units.
In April, the firm bought Del Monte Center, a 626,000-square-foot, open-air regional shopping center in Monterey, Calif., followed in May by the purchase of two San Diego office towers.
Recently, the company has focused primarily on acquiring more shopping centers in western states, looking for either dominant centers that have strong sales and stable tenants, or properties in need of improvement.
Waikele Center is considered by local real estate experts to be an impressive success as a consistent draw for value-conscious residents and busloads of tourists despite opening in 1993 at the onset of the state's economic slump that lasted for most of the 1990s.
Local developers Dick Gushman and Duncan MacNaughton built the center in conjunction with the adjacent Waikele Premium Outlets mall on former sugar cane fields, 15 to 20 miles from Honolulu's urban core but in the middle of Central O'ahu's growing residential community.
Waikele Center generally has been 100 percent occupied since its inception, according to Wendell Brooks III, vice president of commercial properties for PM Realty Group, which handled center leasing for Jamestown.
"The center has high-quality construction, great visibility, strong tenants ... very strong sales — all of what goes into making a very successful center," Brooks said.
He said that when Borders Books & Music cut back a few thousand square feet of its store earlier this year, 25 businesses expressed interest in five spaces, which were filled by Starbucks, Jamba Juice, Gamestop, Island Page and Genki Sushi.
Gushman and MacNaughton sold Waikele Premium Outlets in early 1997 to New Jersey-based outlet mall investment trust Chelsea Property Group for $76 million, a sum that analysts said was the highest ever paid for a U.S. outlet mall on a square-foot basis.
Jamestown bought a majority stake 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, which American Assets also acquired.
Doug Pothul, Hawai'i office chief for real-estate brokerage firm Marcus & Millichap, called Waikele Center a premiere Hawai'i asset expected to attract heavy interest from Mainland investors who have bought a string of primarily hotels and shopping centers as the state's strong economy rolls along.
"This trend should continue as long as interest rates remain favorable and there's a continuation of an abundance of Mainland capital looking in our market, which we've seen for the past three or four years," he said.
Chamberlain said American Assets had been exploring Hawai'i for about a year, and is interested in adding to its holdings here.
"While there is nothing currently identified, we are continuing our search for additional retail properties both in the Islands and here on the Mainland," he said.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
