Posted on: Wednesday, April 27, 2005
Company purchasing 547 homes in Kalaeloa
By Andrew Gomes
Advertiser Staff Writer
A California real estate firm is buying 547 Kalaeloa homes from the private developer that acquired the housing units from the Navy two years ago.
The deal is subject to closing, but if completed as expected it could bring major changes to the community made up of a mix of military and civilian renters occupying 482 of the homes on the former Navy base known as Barbers Point Naval Air Station.
Carmel, though a spokeswoman, declined comment because purchase is still pending.
There has been some community concern that a new owner might sell the homes individually and potentially displace many tenants to take advantage of soaring property values and strong homebuyer demand.
It is a situation faced by renters around the state particularly in the last year as Hawai'i's red-hot home market entices landlords to sell their rental units.
Carmel, however, is primarily an owner of multi-family housing it rents, and has a record of investing in projects to improve rental rates and property values.
The company in mid-2002 bought the 700-unit Moanalua Hillside Apartments complex for nearly $50 million and spent roughly $10 million on improvements including upgrades to apartment as well as a sand volleyball court, putting green, and bike racks.
Rents rose by about $100 to $200 for units previously rented for $800 a month, and rose by $200 to $360 for units previously rented for $925 a month.
In January, Carmel sold the complex to an affiliate of Los Angeles-based real-estate investment firm Douglas Emmett Realty Advisors for $108.5 million, according to property records.
Carmel owns more than 30 multi-family projects on the Mainland. The company also owns the Aloha Surf Hotel in Waikiki that it bought for $15.7 million in December. Carmel plans to renovate the hotel and sell the property room by room.
At Kalaeloa, Ford Island Properties has spent roughly $5 million renovating the former Navy homes — mostly painting, and upgrading roofs, shutters and fencing. Some of the homes, which date back to the 1940s, are in need of more major repair.
Two years ago while still under Navy control, only about 190 of the nearly 550 homes were occupied. Today, 482 are occupied, according to Steve Colon, senior vice president of Hunt Building Co., a partner in Ford Island Properties.
Most of the homes are townhouse-style buildings with two to eight units each. There are also 28 older plantation-style homes. Most of the single-family homes, former officers' quarters, require substantial work. Only nine are being rented.
Ricky Cassiday, a local housing market analyst, said the former Navy housing at Kalaeloa has provided much-needed rentals in the market with extremely low vacancies and rising rents.
Maeda Timson, chairwoman of the Makakilo/Kapolei/Honokai Hale neighborhood board, said there has been some concern that the units might be resold to individual buyers and removed from the rental market.
However, that would require subdivision of the property, which could be difficult because the homes are allowed under a zoning variance.
Ford Island Properties acquired the Kalaeloa homes as part of a deal with the Navy that required the private developer to pay for new construction and upgrades at Ford Island in Pearl Harbor where the Navy is consolidating operations.
As part of the deal, Ford Island Properties is paying the Navy $84 million and is receiving title to Navy property including the Kalaeloa homes and the former Waikele naval magazine. The company also maintains and manages Navy property at Ford Island, Iroquois Point, Pu'uloa and Halawa Landing in return for rental income under 65-year lease agreements.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
San Francisco-based Carmel Partners has a contract to purchase the complex of mostly townhomes from Ford Island Properties, the firm that has been renovating the homes and renting them to tenants since it acquired the property from the Navy in mid-2003.
