Tuesday, October 23, 2007

Kukui Mall

Another small neighborhood shopping center on Maui was sold this month to a mainland real estate investment and development firm, which is aiming to significantly increase its portfolio in the islands.

An affiliate of Chicago-based M & J Wilkow Ltd. bought the fee-simple interest in the 40,974-square-foot Kukui Mall in Kihei on Oct. 1 for $18.7 million. The seller is Niu Pia Land Co. Ltd., a local real estate company. The fund that acquired the mall, Wilcal Maui LLC, is operated by Wilkow and the California State Teachers' Retirement System.

The recent sale is one of several large transactions involving Maui retail properties over the past month, part of a growing trend of mainland investors aggressively competing to acquire properties in Hawaii.

"Hawaii has great fundamental economic characteristics," said David Harvey, a partner of M & J Wilkow. "We like the dynamics in Hawaii -- it has incredibly good growth and low unemployment -- it's a very good place to invest."

Kukui Mall's location at 1819 South Kihei Road, close to the resort areas of Wailea and Makena, makes it an attractive investment with great potential, Harvey said. The center is 94 percent leased with 21 tenants including Consolidated Theatres, Starbucks, Tony Roma's and Local Motion.

The retail center, built in 1988, is comprised of four single-story buildings, which last had major renovations in late 1999.

M & J Wilkow is looking to possibly redevelop the theater site and expand the center, though plans are uncertain because of the pending sale of Consolidated Theatres, Harvey said.

Consolidated's owner, Pacific Theatres Exhibition Corp., which is selling the Hawaii chain to Reading International Inc., has expressed interest in terminating its lease with the center early because the four-screen theater is no longer profitable, he said. However, the new buyer hasn't discussed plans for the Kukui Mall theater.

"It's an underperforming theater for them, so they would like to do something else for it and we'd like to do something else for it too," he said.

Harvey said the mall would have to develop a larger theater for it to be successful, an option M & J Wilkow is considering.

The company, whose overall portfolio totals about $800 million, is looking to eventually grow its Hawaii portfolio to $200 million, Harvey said.

Its other Hawaii holdings include the Parker Ranch Center on the Big Island, acquired in December 2005 for $31.5 million, and the Coconut Marketplace in Kapaa on Kauai, purchased in March for $42.5 million.


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