Behind the Deal: Alexander & Baldwin's intriguing purchase of Manoa Marketplace

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For the first time ever, the University of Hawaii Manoa Shidler College of Business, UH Athletics and the CCIM Hawaii Chapter teamed up for an event. Besides networking with such professionals as Shidler College Dean Vance Roley, Linda Gee of Standard Commercial and CCIM President Anthony Provenzano of Sofos Realty, it was fascinating to hear the “behind the deal” stories from key executives from such Hawaii commercial real estate heavyweights as A&B and BlackSand Capital.
Jeff Pauker, VP of investments for A&B, spoke about how the tricky Manoa Marketplace deal came about. The deal was a challenge because the land and buildings were owned by separate entities. Pauker said from start to finish, it took A&B about 18 months to get this deal done. A&B first approached the owners of the land, a local family who was ready to sell. There also was less than 10 years left on the ground lease, so when A&B approached the owner of the buildings, an entity in California, A&B, in its proposal, mentioned that there wasn’t much time left on the ground lease and that it would be raising rents. Pauker said the short timeframe sped up the process and the California firm eventually sold its interest to A&B, thus giving it full ownership of the marketplace. A&B said the marketplace is a very attractive asset, as it is the only grocery -and drug-store anchored shopping center in the highly coveted and affluent area of Manoa.

Bryan Li, executive vice president of acquisitions and asset management for BlackSand Capital, gave insight on its recent sale of Pearlridge Uptown II, the portion that includes T.J. Maxx. BlackSand made a 100 percent return on this investment. In 2011, BlackSand bought the asset, which included the former J.C. Penney building for about $36.4 million. It then redeveloped this section of the state’s second largest shopping mall with successful tenants such as Ross Dress for Less and T.J. Maxx, along with dozens of other inline tenants. But with less than 15 years left on the ground lease with Kamehameha Schools, BlackSand decided it should sell Pearlridge Uptown II before the ground lease expired. Li said it went straight to Washington Prime and O’Connor Mall, which owned the rest of Pearlridge. The key Uptown II portion, which comes with development opportunities if the surface parking area is utilized to build more retail buildings, was something Washington Prime and O’Connor coveted. Washington and O’Connor didn’t mind the ground lease issue and wanted to own the entire mall and that key Uptown II portion. Washington and O’Connor went on the buy Uptown II for about $70 million.

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