Bascom Buys Honolulu Multifamily for $73.5M

By Dees Stribling, Contributing Editor

Honolulu—Bascom Group LLC, a private equity firm, has bought Oasis at Waipahu Apartments, a 406-unit property in Waipahu, Hawaii, for $73.5 million. According to the buyer, the deal represents the largest multifamily transaction in Hawaii since 2007.

As Hawaiian multifamily goes, the property has an early vintage, originally being built in 1965, though extensively renovated five years ago. Oasis at Waipahu is located on about 18 acres outside of Honolulu near Highway H1, and features mostly two-bedroom townhouse units, but also includes three-bedroom apartments. Its units average 891 square feet.

Bascom is no stranger to the Hawaiian multifamily market. The Irvine, Calif.-based company has bought five other properties in the state. Andrew Newton, Bascom principle, says that properties of this kind are highly desirable, since Hawaii has extremely high barriers to entry for investors and high land and construction costs for developers.

Vacancies are low as well. According to the latest report on the metro Honolulu apartment market by Colliers International, vacancies are about 2 percent market wide, and rents have increased roughly 12 percent in the last three years.

The Oasis at Waipahu’s occupancy rate, at about 97 percent, is pretty much in line with the tight market. Supply is tight for Hawaiian apartments in part because few properties have been built in recent years—which is true in many places—but also because rental property development has long taken a back seat to condo development in the market.

Moreover, the Hawaiian economy, so hard hit in the years following 2008, is making a recovery. The tourism industry in particular is on a rebound, and while tourists typically don’t stay in apartments, many service industry workers catering to them do. After an exceedingly tough 2009 for Hawaiian tourism, visitor arrivals in the islands increased 7.7 percent in 2010, and then 3.8 percent in 2011. According to the state’s Department of Business, Economic Development and Tourism, the number of arrivals will jump again in 2012 by 4.4 percent.

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