PacificBusinessNews-article

November 22, 2013

Kaneohe Ranch’s Kailua lands attracted interest from 80 buyers

By Duane Shimogawa

Kaneohe Ranch President and CEO Mitch D’Olier said Friday that more than 80 potential buyers were interested enough in purchasing the Kailua-based firm’s commercial real estate assets in Hawaii to sign confidentiality agreements.
This week, Honolulu-based Alexander & Baldwin (NYSE: ALEX) said it is acquiring the Hawaii properties from Kaneohe Ranch and the Harold K.L. Castle Foundation, including commercial properties in Kailua town, for $373 million.
Earlier this year, an unnamed, substantial buyer approached Kaneohe Ranch to possibly purchase its commercial real estate holdings, and that’s when D’Olier talked to the board of directors, as well as Eastdil Secured, its investment advisor.
He told PBN that the valuation of the properties by Eastdil Secured came back higher than Kaneohe Ranch anticipated.
“We were surprised,” he said. “That’s because the interest-rate market is very unusual now. The low interest rates allow people to provide higher prices for real estate cashflow. That’s what I think what’s going on.”
The combination of favorable interest rates and the fact that the Hawaii real estate market seems to be ripe for the picking from investors all over the world, contributed to the major interest in the Kaneohe Ranch real estate portfolio, D’Olier said.
“If you look at Hawaii right now, there is a lot of good news,” he said. “The hotels have increased revenue periods [and] we are still living in the hallow of Sen. [Daniel] Inouye’s largesse. There is a lot of military construction coming and already started, [so] the story is pretty good about Hawaii right now.”
As the purchase process rolled out, D’Olier said that the original 80 interested parties turned into 10 serious buyers, including A&B.
“Then we settled on A&B,” he said. “I’m really happy about the outcome. I think Chris [Benjamin, president and COO of A&B] and Stan [Kuriyama, chairman and CEO of A&B] really understand the Hawaii situation. The guy that’s got it, understands it all.”