LOS ANGELES—Johnson’s Capital’s Brent Lister and Eric Salveson, senior vice presidents in the firm’s Los Angeles office, have arranged a $19.5 million loan secured by a retail center in Lahaina, on the island of Maui, Hawaii.
The property, the Outlets of Maui, is comprised of 10 buildings containing 145,855 sq. ft. of retail space located at the northeasterly corner of Front and Papalaua Streets. The wood-frame buildings were originally constructed in 1989 as a multi-tenant resort retail center. As with many major properties in Hawaii, the Outlets of Maui is under a long-term lease with a major land trust. In 2008, the owner and primary tenant went bankrupt, dropping the occupancy of the property to approximately 50 percent, down from its previous 90 percent average.
The principals of Honu—Andrew Smith, Tom Applegate and Mona Abadir—have experience in the outlet sector have developed other retail properties on Oahu and Kauai. The grand re-opening is planned for later this year. Renovation work has already begun.
Although the transaction could have been structured with a short-term loan and then refinanced with a longer permanent loan after the new tenants were in occupancy, Salveson and Lister worked with a major life insurance company to structure a fully-amortizing, fixed-rate, non-recourse loan to be placed on the property at acquisition so the borrowers could lock in today’s favorable rates and know their long term cost of financing. This is the second loan that this life insurance company has funded with this developer in Hawaii.
In addition, Johnson Capital arranged for the necessary equity capital through two different sources. The first source provided the initial start up capital while the permanent capital replaced the original source after the loan was in place.
The newly configured center will have tenants such as Coach, Brooks Brothers, and Calvin Klein while retaining the Hard Rock Café and Ruth’s Chris steak house. The majority of improvements in this area preserve the architecture and atmosphere of a 19th-century Hawaiian seaport.