L&B Investing $175M in Hawaii Retail

HONOLULU-L&B Realty Advisors LLP of Dallas is in the process of acquiring 550,000 sf of retail in five Hawaii properties for about $175 million. The acquisitions are being made on behalf of institutional investors through L&B’s joint venture with locally based MN Capital Partners.

L&B chief executive G. Andrews Smith tells GlobeSt.com that it has closed on four of the retail centers and expects to close on the remaining one within the next 30 days. “Over the past 24 months, we identified Hawaii’s residential and retail markets as under valued, so we started developing relationships,” he says. “We formed a joint venture with MN and really just worked hard to get some things teed up and closed.”

The joint venture acquired 50% ownership of the Coconut Grove Marketplace on Hawaii and Poipu Shopping Village on Kauai, which are on ground leases, and acquired 100% fee-simple ownership of the Kukui Grove Center and Kukui Marketplace, which are also located on Kauai. MN Capital Partners, a joint venture partner since 2002 and located in Honolulu, will assist in managing the assets and continue to identify and evaluate investment opportunities.

Kukui Grove Center and Kukui Marketplace are adjacent open-air retail centers on Kauai with a total of 455,230 sf. They are located in Lihue, a hub of commercial activity on the island, and contain the island’s only four department stores. Anchor tenants for Kukui Grove include Macy’s, Sears, Longs Drugs and Star Market. Kukui Marketplace has Kmart and Borders Books.

Poipu Shopping Village is an upscale retail and dining development in the Poipu Resort Area on Kauai. The open air center was built in 1985 and has six major buildings totaling approximately 40,674 sf. The anchor tenants are Keoki’s Restaurant, Roy’s Poipu Bar & Grill and Whaler’s General Store.

Coconut Grove Marketplace is a two-story 48,112-sf retail center located in Kona, Hawaii on Alii Drive facing Oneo Bay. This oceanfront center is comprised of seven buildings with large national retail tenants like Hard Rock Café and Outback Steakhouse.

L&B has one other Hawaii retail project in escrow on behalf of its clients. That property is Kalakaua Retail Center, a 5,600-sf retail center in Waikiki’s core area.

With regard to the retail, Smith says all the centers are well leased, so the plan is to add value through expansion, where applicable, and through some retenanting as additional brands come to Hawaii. “Believe it or not, Starbucks has not been in Hawaii that long, Jamba Juice just went over and there’s no Whole Foods yet,” he says. “This is our first big retail portfolio buy there but it won’t be the last.”