By Scott Baltic, Contributing Editor
Douglas Emmett Inc., a Santa Monica, Calif.–based REIT, has purchased a 468-unit multi-family property in central Honolulu for $146 million, or about $312,000 per unit, Douglas Emmett announced Tuesday.
The 12-acre, 24-building Waena Apartments complex is at 1320 Aala St., just north of downtown Honolulu and less than a mile west of the famous “Punchbowl,” site of the National Memorial Cemetery of the Pacific.
As of press time, the seller had not been disclosed and Douglas Emmett could not be reached for comment.
The property recently underwent a $22 million capital improvement program, including upgraded interiors, a new community center and a solar electrical system. The buyer stated that it closed the purchase using its credit line, but intends to obtain permanent financing “in the near future.”
“With the sale of Waena Apartments, the Honolulu apartment market is on track to surpass $300 million in total sales for 2014,” Jared Ikeda, president of Apartment Advisors L.L.C., Honolulu, told Commercial Property Executive. “Overall, the apartment market remains at an all-time historic high in terms of pricing. The average price per unit for the third quarter of 2014 was $261,000, compared to the previous peak of $182,000 back in 2006.”
“There are only a handful of institutional-grade multi-family assets in Hawaii, so it’s not surprising Waena Apartments sold for over $300,000 per unit, given the recent $22 million enhancement to the property and its strategic location in the Honolulu corridor,” Ikeda added.
“The key for Douglas Emmett is to continue occupancy stability while increasing rents,” he added. That’s because there likely will be competition for residential tenants as several new projects are completed over the next two or three years in Kaka‘ako, a former industrial area just south of downtown Honolulu.
Multiple residential projects, both luxury for sale and affordable rentals and fee simple properties, are being developed in Kaka‘ako, along Ala Moana Boulevard between South and Cooke streets.