Sep 10, 2013, 10:56am HST Updated: Sep 10, 2013, 11:36am HST
Janis L. Magin | Managing Editor- Pacific Business News
Alexander & Baldwin’s property arm said Tuesday that it has acquired 27 residential properties in Honolulu’s oceanfront Kahala neighborhood, along with properties in Windward Oahu and on Maui, from Japanese billionaire Genshiro Kawamoto for $98 million.
A&B Properties said 27 of the homes are located along Kahala Avenue between Diamond Head and the Waialae Country Club, half of which have ocean frontage or beach access.
A&B (NYSE: ALEX) plans to fix up the homes, which have fallen into disrepair under Kawamoto’s ownership, and reposition the properties to take advantage of the current real estate market.
“The opportunistic acquisition of this highly coveted residential land portfolio in Hawaii represents a significant investment in a key Oahu market and reflects A&B’s confidence in Hawaii’s economy and real estate markets,” Chris Benjamin, A&B’s president & chief operating officer, said in a statement. “From a strategic perspective, the transaction highlights our competitive strengths in Hawaii.”
Benjamin said Honolulu-based A&B was able to “leverage our local market knowledge and relationships to complete an off-market transaction at attractive pricing.”
The assessed values for the land only on the Kahala properties totals $117.6 million, according to city tax records, A&B said.
Rumors of a bulk sale surfaced last week, but the rumored buyer was said to be in Japan. The A&B acquisition fits with the kamaaina company’s strategy of reinvesting in the Hawaii market.
“Our experience and balance sheet strength allowed us to negotiate and close the all-cash deal in less than 90 days, once the seller indicated a willingness to sell, and we anticipate achieving investment returns consistent with our past Hawaii investments,” Benjamin said.
A&B Properties Executive Vice President Michael G. Wright noted that A&B has now acquired nearly 90 percent of the current inventory in Kahala, one of Honolulu’s oldest, priciest and most prestigious neighborhoods that attracts local executives as well as well as international buyers.
“We will be focused on cleaning up these properties, and anticipate a full recovery in property values,” Wright said in a statement. “This acquisition is truly a once-in-a-lifetime opportunity, and we are gratified to see our efforts come to fruition.”
Sales of the properties will start immediately, and A&B expects them to sell over a three- to five-year period.
The portfolio includes the 27 Kahala Avenue properties, which encompass 13.7 acres; two residential lots and a preservation-zoned parcel in Windward Oahu and a 146-acre agricultural-zoned parcel in Kihei, Maui.
The 27 Kahala Avenue properties include eight oceanfront lots, one oceanfront home, five nonoceanfront lots and one home located on the makai, or oceanside, side of Kahala Avenue, amd six homes on the mauka, or mountain, side of the street.
Benjamin also has said A&B is interested in acquiring another large Hawaii real estate portfolio — the Kaneohe Ranch properties, which include most of Kailua town.