Officials stand behind long-term investment Charlotte Woolard – The Garden Island Sales at the Kukui‘ula resort in Po‘ipu got off to a slow start, with only eight year-to-date closings on the books in a tight housing market, Alexander & Baldwin
Officials stand behind long-term investment
Charlotte Woolard – The Garden Island
Sales at the Kukui‘ula resort in Po‘ipu got off to a slow start, with only eight year-to-date closings on the books in a tight housing market, Alexander & Baldwin officials told investors yesterday.
But the company plans to step up construction at the 1,000-acre Po‘ipu-based resort community, said Stanley Kuriyama, chief executive of A&B Properties.
“While Kukui‘ula sales are being impacted by a softening residential market, we have not lost confidence in Kukui‘ula’s success over its 10-year development horizon,” he said.
Kukui‘ula Land Development Co., a joint venture with A&B and Scottsdale, Ariz.-based DMB Associates, Inc., broke ground at the proposed 1,250 unit resort in January. The company released 122 units for sale in April, then more than doubled that number, according to A&B’s 2005 annual report.
The initial draw saw 300 prospects make $50,000 refundable deposits on parcels valued between $1 million and $4 million, according to company reports. But as A&B enters its fourth quarter, that volume of final sales has not materialized.
About 75 to 80 letters of intent are pending, Kuriyama said, and the sales force expects to issue and close on a percentage of 80 contracts this year.
“It seems like it is not going quite as well as they had expected,” said Jason Kremer, an San Francisco-based analyst with investment bank Caris & Co. “Kukui‘ula is suffering due to the housing market pull back. A lot of sales will get pushed into 2007.”
Lagging sales have not hurt A&B’s stock price, he added, largely due to the company’s diversified revenue streams, which include shipping giant Matson Navigation Co.
The slowed Kaua‘i housing market, which turned over only 295 properties last year, generally results from increased interest rates, construction costs and prices — none of which are accommodated by the local wage environment, said Paul Brewbaker, senior vice president and chief economist with Bank of Hawai‘i.
However Kukui‘ula attracts offshore investors who are largely insulated from those market concerns, he said.
“The investor profiles are a little less attached to the underlying market currents,” he said. “Kukui‘ula occupies a niche and in the long term probably will pay off for A&B.”
Local Kukui‘ula representatives agree.
“It’s slower, but I don’t know that we’re overly concerned,” said Dee Crowell, director of planning. “It’s a long-term project. Right now we’re concentrating on building infrastructure.”
The plan for the resort community includes hotel and vacation units, residences and a golf course. Sales began to finalize in September, according to A&B Properties.
A&B shares closed at $44.67 yesterday, up 5 cents from $44.62.
• Charlotte Woolard, business writer, can be reached at 245-3681 (ext. 251) or cwoolard@kauaipubco.com.
