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KAPAA, HI-A group of California investors headed by Diversified Equity Investment Corp. has taken a seven-building, 386,000-sf portfolio of mostly retail properties to market, the largest of them the 115,000-sf Kauai Resort Village here. The sellers have tapped Faris Lee Investments of Irvine, CA and CB Richard Ellis in Honolulu to market the portfolio.

Called the Hawaiian Collection, the portfolio consists of resort retail centers, Safeway grocery-anchored centers and one professional office center at locations including Oahu, Maui, Kauai and Hawaii’s Big Island. More than 80% of the space in the portfolio is occupied by national credit tenants including Safeway, Roy’s Restaurant, Longs Drugs, ABC Stores, Starbucks, Denny’s, Subway, Cold Stone Creamery and Verizon.

According to Richard Walter, president of Faris Lee, the three Safeway-anchored centers are “some of the most successful grocery-anchored centers in the nation” with annual sales averaging more than $800 per-sf. Besides Walter, the marketing team for the properties includes Donald MacLellan, managing director of Faris Lee, along with Wendell Brooks III, senior vice president with CB Richard Ellis in Honolulu.

Walter notes that the portfolio offering “gives an investor an extremely rare opportunity to immediately become one of the largest retail owners in Hawaii.” He points out that Hawaii is one of the most expensive markets for new development because of the limited availability of construction materials, combined with the high costs of land and construction. No asking price was listed for the portfolio, but Walter says the asking figure is “below replacement cost,” which would be about $500 million for the portfolio. According to Brooks, the portfolio holds substantial upside potential because current rents are well below market.

The retail properties comprising the portfolio, in addition to the Kauai Resort Village, are the 74,846-sf Crossroads Shopping Center at 75-1027 Henry St. in Kailua-Kona, the 58,774-sf Kahana Gateway Resort Retail Center along the Honoapiilani Highway, the 53,503-sf Safeway at Windward Town & Country Plaza at 200 Hamakua Dr. in Kailua, the 33,639-sf Shops at Windward Town & Country Plaza directly across from the Windward Town & Country Plaza and the 29,255-sf Shops at Halekuai Center at 563 Farrington Hwy. in Kapolue. The office property is the 21,231-sf Kahana Gateway Professional Office Center at 10 Hoohui St. in Lahaina.

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