Affordable Housing Partners Wins Bid to Purchase Leasehold on 12 City Rentals

by Adriana Pop, Associate Editor

The City and County of Honolulu has selected Honolulu Affordable Housing Partners LLC to complete a leasehold purchase agreement for the City’s 12 rental housing complexes.

In February, the City and County of Honolulu issued a Request for Proposal seeking bids from private companies interested in purchasing, managing and maintaining 12 affordable apartment complexes situated in various parts of Oahu, while leasing the land beneath them for 65 years.

Honolulu Affordable Housing Partners is comprised of Highland Property Development LLC of Arcadia, Calif.; Richard Gushman of Honolulu, who has over 40 years of real estate experience; and Stephen Gelber, a Honolulu real estate and tax attorney who has worked on many affordable housing transactions in Hawaii.

During the 65-year lease term, the purchasers will be required to abide by the current affordable housing rules. Out of a total of 1,257 units, 850 qualify as low/moderate income under HUD guidelines, 189 qualify as gap-income units, and the remainder of the apartments will be rented at market rates.

The City has decided to pursue this type of arrangement since Hawaii experiences a rental housing deficit, which is particularly visible in the affordable sector.

In other news, General Growth Properties Inc. plans to invest $250 million in the expansion of its 2.4 million square-foot Ala Moana Center. The Chicago-based company plans to redevelop the current 340,000-square-foot Sears store and replace it with approximately 700,000 square feet of retail and restaurant space, including a three-level, 160,000 square-foot anchor tenant. Plans also call for a fourth-level parking deck, the Pacific Business News reports.

In April, General Growth completed the acquisition of 11 Sears anchor pads from Sears Holdings Corp. for a total of $270 million. Under the agreement, the lease on the space at Ala Moana accounted for $250 million.  Ala Moana is of the country’s most lucrative malls, with sales surpassing $1,200 per square foot. Sears will continue to operate the store through the end of 2013.

Photo credits: www.panoramio.com