The board of directors of Alexander & Baldwin, Inc. (NASDAQ: ALEX) Thursday approved a joint venture agreement with DMB Associates, Inc. of Scottsdale, Ariz. The agreement is expected to accelerate the development of A&B’s Kukui’Ula resort community project at Koloa.
The board of directors of Alexander & Baldwin, Inc. (NASDAQ: ALEX) Thursday approved a joint venture agreement with DMB Associates, Inc. of Scottsdale, Ariz. The agreement is expected to accelerate the development of A&B’s Kukui’Ula resort community project at Koloa.
DMB is a privately held real estate development company. The company is experienced in master-planned community development and has developed projects in California, Utah, and its home state.
Kukui’Ula is A&B’s 1,045-acre project along Lawa’i Road in Kukui’ula, a coastal section of Koloa. The development has been the subject of heated public discussions when the company was before various governmental agencies and bodies seeking rezoning and other entitlements to allow the project to proceed.
Some 837 acres of the project are fully “entitled” for development of a resort, an 18-hole golf course, and for residential and commercial use. The remaining 208 acres are partially entitled.
Land use entitlements were obtained in 1999. Since then, A&B has actively pursued pre-development activities including archaeological preservation, water source development, surveying, beach enhancement and other land planning.
Among the known changes planned will be a lower overall density, meaning fewer housing and resort units than the project is permitted for, and were reflected in the latest master plan, said Stan Kuriyama, chief executive officer of A&B Properties.
“I think it will be well-received,” Kuriyama said. Though financial agreements between the partners remain confidential, he said the new partner brings “significant financial investment” to the project, with A&B’s contribution being the land and other items.
A&B earlier announced its intention to seek a development partner for the sprawling South Shore acreage, and that search may have been sped up by the island’s hot real estate market.
A&B executives happened to be in Scottsdale, Ariz., and saw a development of DMB there, and knocked on the developer’s door, Kuriyama explained. Coincidentally, DMB was informally seeking to establish a Hawai’i presence, did “huge” amounts of due diligence not only regarding Kukui’Ula but all of Hawai’i, and signed on to be A&B’s partner, he said.
The new partner’s experience is deepest in golf and recreational communities, and the plan for Kukui’Ula all along has included an 18-hole championship golf course with recreational biking and walking trails, and a mix of residential and resort accommodations.
“We are very excited about setting a quicker pace on this project, and are particularly pleased to be moving forward with such an experienced, high-caliber partner as DMB,” said Allen Doane, A&B president and chief executive officer.
“Kukui’Ula is one of the few remaining entitled, large resort projects in Hawai’i, and it holds tremendous opportunity for us,” said Doane.
“DMB brings capital, master-planned community experience, and a proven track record of success to this project, and they conduct business with a high degree of integrity, which is important to us,” he said.
“DMB shares our vision for this project – to build a community that is sensitive to the surrounding community, to the natural beauty of Kukui’Ula, and to the surrounding ocean and lands,” said Doane. “Together, we will create a residential resort development unlike any other in Hawai’i, and one of which Kaua’i will be proud.”
“Kukui’Ula presents a one-of-a-kind opportunity for us. We have long wanted to establish a presence in Hawai’i,” said Drew Brown, DMB Associates president and managing partner.
“We enjoy developing large, master-planned communities, with an emphasis on golf and recreational resort properties, like Kukui’Ula,” Brown said.
“The property itself has tremendous physical attributes – it is simply beautiful. And, to be able to partner with a company like A&B – clearly a well-regarded corporate citizen and one of the premier real estate companies in Hawai’i – we couldn’t ask for a better entre to this community.”
The new joint venture is named Kukui’Ula Development Company (Hawaii), LLC (limited liability company), and is moving rapidly to commence development, while being tasked also with all future planning and sales for the Kukui’Ula project.
The developer plans to move ahead soon with action on the project. Initial plans call for refining the project master plan, updating infrastructure master plans, preparing construction drawings and securing other necessary governmental approvals.
Gaining approvals might entail another round of hearings before either the Kaua’i Planning Commission or County Council, or both, as the joint venture’s plans involve modifying the existing Kukui’Ula master plan. The changes could be considered major ones from plans approved by county bodies three years ago.
Without knowing specifics about potential changes to the Kukui’Ula plans, it is too early to say if new permits (complete with public-hearing requirements) will be required, according to a county Planning Department source.
The A&B Properties staff at the Koloa Estates project, the first for-sale portion of the Kukui’Ula project, recently sold the sales office site right out from under itself, forcing a movement of the sales office from Po’ipu Road to Lawa’i Road.
That location likely will become the main development office, while remaining the sales offices as well. A&B staff including Tom Shigemoto, Trinette Kaui and Suzette Kane, will remain involved in the Kukui’Ula project and the continued development and sale of the second residential phase of Kukui’Ula, Koloa Plantation, which is around 18 months away from the for-sale phase, Kuriyama said.
Koloa Estates, 32 single-family lots, has sold out.
Although nearby residents still have concerns about traffic flow, construction noise, and the way the overall project may change the current nature of the South Shore, Kaua’i elected and appointed officials yesterday expressed instant praise for the new partnership.
“This is wonderful news for Kaua’i, and I am delighted to see the project move forward,” said Mayor Maryanne Kusaka.
“We have worked closely with A&B to address many challenges over the years, and were always confident that they would find the right vision for this property,” Kusaka said.
“This project brings new capital and responsible development momentum to Kaua’i, and it’s a very positive statement about our future. We welcome DMB Associates as A&B’s new joint venture partner to our island community,” Kusaka said.
“I have no doubt that this project will be something that we can all be proud of,” said Ron Kouchi, Kaua’i County Council chair.
“With these two companies leading its development, Kukui’Ula will become a premier Hawaiian resort community, and an integral part of Kaua’i,” said Kouchi.
“A&B has joined forces with a first-class partner. I have seen the type of projects that DMB has done on the Mainland, and I can assure you that they excel in exactly this type of master-planned, resort community, producing developments that are respectful of their environment and family-oriented,” said Kouchi.
“Kaua’i is currently experiencing a very active real estate market,” said Jim O’Connor, president of the Kauai Board of Realtors.
“The combination of low-interest-rate mortgage loans, a pent-up demand, and a relatively small inventory, has resulted in brisk sales and escalating prices throughout the island,” said O’Connor. “The demand is equally strong from both local residents and returning visitors.”
“I believe Kaua’i’s economy has stabilized following the events of last year, and even greater improvement is on the horizon, with additional direct flights from the Mainland beginning this summer,” said Gini Kapali, director of the county Office of Economic Development.
A&B owns around 22,000 acres on Kaua’i, and about 91,000 acres in Hawai’i. These holdings make A&B the third-largest private landowner on Kaua’i, behind Robinson Family Partners and Steve Case.
A&B is the fifth-largest private landowner in the state, and the developer of the 1,500-acre Wailea Resort, a master-planned resort community on Maui’s south shore. A&B nurtured and grew Wailea for 19 years before selling it in 1989.
The company also has an asset and property management portfolio composed of 4.5 million square feet of leasable space in 18 Mainland and 27 Hawai’i properties.
In the past three years alone, A&B has made 13 acquisitions of Hawai’i real estate, with a total investment of nearly $200 million. A&B Properties currently has active development projects on O’ahu, the Big Island, Maui and Kaua’i. Additional information may be found at its Web site: www.abprop.com.
DMB was established in 1984 by principals Brown, Mark Sklar and Bennett Dorrance. The company currently has 12 ongoing or recently completed development projects which encompass a total of 34,000 acres, including 40,000 residential units and 10 golf courses.
Most of DMB’s development projects have been undertaken as joint ventures, with landowners such as the Rancho Mission Viejo Company in Mission Viejo, Calif.; Highlands Management, Inc. in North Lake Tahoe, Calif.; Grayhawk Development in Park City, Utah; the Marley and Corrigan families in Phoenix; and the Caterpillar Foundation in Buckeye, Ariz.
Staff Writer Paul C. Curtis can be reached at mailto:pcurtis@pulitzer.net or 245-3681 (ext. 224).
