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Dec. 2, 2013

A&B to Acquire Hawaii Commercial Portfolio from Kaneohe Ranch and the Harold K.L. Castle Foundation

By Adriana Pop, Associate Editor

In a $373 million deal, Alexander & Baldwin Inc. has agreed to purchase the Hawaii commercial real estate portfolio of Kaneohe Ranch and the Harold K. L. Castle Foundation.

Expected to close in late December, the transaction encompasses $260 million for the assets of Kaneohe Ranch and $113 million for the assets of HKL Castle Foundation.

Primarily located in the Windward Oahu town of Kailua, the portfolio consists of 386,000 square feet of grocery- and drug store-anchored shopping centers, retail strip centers, light industrial properties and ground leases. The assets also include about 585 acres of mostly preservation-zoned land in Kailua and more than 50 acres of retail and other commercial centers that are ground leased to third parties in Kailua, other parts of Windward Oahu and Honolulu.

The transaction accelerates A&B’s strategy of migrating its Mainland portfolio to Hawaii. The company will fund the purchase with proceeds from the planned sale of several commercial properties it owns on the Mainland, along with other tax-deferred 1031 proceeds.

“When this transaction and the related Mainland property sales close, we will have shifted, in less than a year, approximately two-thirds of our Mainland net operating income to Hawaii, where we believe we are better able to leverage our local market knowledge,” Christopher Benjamin, A&B president & COO, said in a news release. “Eighty percent of our commercial portfolio net operating income will now come from Hawaii assets versus 42 percent at the beginning of 2013.” 

According to the Pacific Business News, 80 potential buyers were interested in purchasing Kaneohe Ranch’s Hawaii properties.

In another recent press release, A&B Properties Inc., a wholly owned subsidiary of Alexander & Baldwin, announced its intention to sell the Maui Mall to a pair of Mainland investors, Denver-based Alberta Development Partners and an affiliate of Chicago-based Walton Street Capital L.L.C. The transaction is expected to close in early 2014.

Photo credits: www.kaneoheranch.com

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