Howard Hughes Completes $238M Refinancing for Ward Village

By Adriana Pop

Honolulu—The Howard Hughes Corp. (HHC) has completed a $238 million refinancing of debt maturing September 29, 2016 with an affiliate of Wells Fargo & Co. The Texas-based developer has closed the term loan to refinance its acclaimed 60-acre Ward Village master-planned community in downtown Honolulu, which ranks as the largest LEED-ND platinum project in the nation.

Ward Village in Honolulu

Upon completion, the 15-year master plan is set to include approximately 4,000 residential units, up to 1.5 million square feet of retail and commercial space, and a four-acre park that will connect with a planned rail stop. Absorption is expected to keep up in a market where supply continues to fall short of demand for new housing.

The new non-recourse term loan bears interest at one-month LIBOR plus 2.5 percent and has an initial maturity of September 12, 2021 with two, one-year extension options. The company swapped $119 million of the loan to a fixed rate of 3.64 percent through its initial maturity date, representing an all-in interest rate of approximately 3.33 percent based on the current one-month LIBOR rate. The financing is secured by the existing Ward Village commercial properties, excluding the condominium towers currently under development, and allows for the future release of collateral to develop additional residential condominium towers and retail properties across the master planned community.

For Waiea and Anaha, the first two condominium towers nearing completion at Ward Village, HHC has secured a $600 million non-recourse construction loan from Blackstone Real Estate Debt Strategies. The loan closed in November 2014 and bears interest at one-month LIBOR plus 6.75 percent, with a December 2019 final maturity date. Contracted sales have exceeded 90 percent for the 491 homes in the two Waiea and Anaha towers that will respectively open later this year and next summer.

Streetscape at Ward Village

Aeo, the third condo tower at Ward Village, broke ground earlier this year and will bring 466 units and a highly anticipated Whole Foods Market flagship store that will be the largest in Hawaii. Next to Aeo, HHC is now proposing the construction of Aalii, a 42-story condo high-rise which is set to include 751 units. The HCDA is scheduled to hold public hearings on the project in November.

So far, HHC has contracted to sell more than 1,100 homes at Ward Village.

“Ward Village continues to attract strong demand with its wide range of unmatched offerings,” stated Grant Herlitz, president of The Howard Hughes Corp. “This financing provides us with the flexibility needed to advance our development plan, and with it, we are pleased to continue our close relationship with Wells Fargo.”

“Ward Village continues to transform into one of the top mixed-use developments in the country,” added Ryan Campbell, a vice president in Wells Fargo’s Commercial Real Estate group. “Wells Fargo is proud to support The Howard Hughes Corp. on this project and provide financing that allows them the capital and flexibility to execute their development plans for the next several years. We look forward to continuing our partnership with them on future projects.”

Images courtesy of The Howard Hughes Corp.