This time next year, a new owner may have control over the retail heart of Waikiki.
Kamehameha Schools announced Tuesday that it is planning to sell the buildings that make up the iconic Royal Hawaiian Center, a mall that spans three blocks in Hawaii’s tourism center.
It’s a big move for Kamehameha Schools, a charitable trust that is the largest private landowner in the state. The trust, which recently invested more than $100 million to improve the center, says the sale is part of its new strategy to be more aggressive with its assets.
The trust has a $9.2 billion endowment and is responsible for investing in education for Hawaiians and taking care of Hawaiian lands.
Because of that mission, Kamehameha Schools is selling the buildings, but not the land beneath the property. The land, known as Helumoa, was once home to Hawaiian royal family members, including King Kamehameha I and Princess Bernice Pauahi Bishop.
Dee Jay Mailer, CEO of Kamehameha Schools, says the historic and cultural importance of the land means that the trust will be careful about who it selects as a buyer. The goal is to find new owners who will honor the Hawaiian sense of place, which might mean not selling to the highest bidder.
The plan to sell the mall is for the most part good news for Hawaii retailers, according to Mark Storfer, chairman of Retail Merchants of Hawaii, an organization that has about 200 members operating 1000 stores in the state.
Storfer thinks the new owner will likely have more retail experience than Kamehameha Schools and attract more customers to the center. That could be a big help as more and more stores are expected to crowd Kalakaua Avenue given plans to redevelop the nearby International Market Place, increasing competition for tourist dollars.
But a new owner could also lead to higher rent, Storfer cautions. Whoever buys the buildings will likely want to recoup what is sure to be hefty investment.
Despite the potential for higher future rent, tenants won’t be affected immediately. Mailer says all existing leases will be honored.
Most current leases are for five to 10 years, Storfer says.
The announcement of the trust’s plans drew praise from even one of its most incisive critics.
Randall Roth, a law professor at the University of Hawaii and author of the groundbreaking book “Broken Trust,” which exposed mismanagement of Kamehameha Schools in the late 1990s, says the sale is a step in the right direction.
“It suggests to me that the trustees are focusing more than ever before on the needs of the intended beneficiaries,” he wrote in an email, “which is exactly as they should be, in my opinion.”
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