Howard Hughes Corp. expects to make $66M profit from luxury Hawaii condo ONE Ala Moana
Janis L. Magin Managing Editor of Digital Content- Pacific Business News
Mar 5, 2013, 12:57pm HST
The Howard Hughes Corp. expects to make a profit of $66 million from the ONE Ala Moana ultra-luxury condominium tower under construction behind Hawaii’s Ala Moana Center shopping mall, the developer’s CEO told shareholders on Tuesday.
Howard Hughes Corp. (NYSE: HHC) CEO David Weinreb said in a letter to shareholders that the units at the building, which is being developed in a partnership with Hawaii developers the Kobayashi Group and The MacNaughton Group, sold out for an average of $1,170 per square foot.
The cost of the project, including the value of Howard Hughes’ air rights, is about $900 per square foot, which means the developer expects to make a profit of $66 million, Weinreb said.
Mark Zuckerberg, founder, chairman and CEO of Facebook Inc. (Nasdaq: FB), is reportedly one of the buyers of several multimillion-dollar units in the 23-story ONE Ala Moana project, which is being built atop a parking garage adjacent to the Nordstrom department store.
Weinreb also told shareholders that he expects condo units in Howard Hughes’ Ward Village master plan will command premium prices, based on resale values of another ocean-view condo in Honolulu’s Kakaako neighborhood.
The company expects Ward Village to “capture premiums” in the same way buyers have paid premium prices to live in the company’s Summerlin development near Las Vegas or The Woodlands near Houston.
Weinreb noted that the Ward properties it had acquired from General Growth Properties (NYSE: GGP) generate about $23 million a year in net operating income. Howard Hughes has plans to build about 500 market-rate units and at least 125 work-force units as part of the Ward Village master plan.
“While we have not yet determined pricing for our first phase towers, market data suggest that comparable existing ‘front row’ product with unobstructed ocean views resold in 2012 at an average price of approximately $1,400 per square foot,” Weinreb wrote. “Hokua, which is the condominium tower adjacent to Ward, resells at the highest average price per foot of any condominium tower in Honolulu, approximately $1,400 per square foot.”
Hokua was also developed by a partnership of the Kobayashi Group and The MacNaughton Group, along with A&B properties, the real estate arm of Alexander & Baldwin Inc. (NYSE: ALEX).