Glimcher, Blackstone Partner on $245M Purchase of Hawaii’s Second Largest Mall

Pearlridge Center, a 1.2 million-square-foot mall in Honolulu, Hawaii, is on the verge of coming under new ownership.

September 1, 2010
By Barbra Murray, Contributing Editor

Pearlridge Center, a 1.2 million-square-foot mall in Honolulu, Hawaii, is on the verge of coming under new ownership. Glimcher Realty Trust and its joint venture partner, an affiliate of investment firm Blackstone Real Estate Advisors, have signed an agreement to acquire the property–the second largest mall in the State of Hawaii–from Northwestern Mutual Life Insurance Co. in a $245 million deal.

Located on Moanalua Road in Honolulu’s Aiea submarket, Pearlridge first opened its doors in 1972, expanded its square footage in 1976 and subsequently underwent substantial renovations in 1995 and 1996.

Glimcher and Blackstone, owning a respective 20 percent interest and 80 percent interest in the joint venture they established March, plan to finance the purchase of Pearlridge partially through a $175 million mortgage loan that the partners anticipate obtaining at the close of the transaction. They will supply the remaining sum through equity contributions reflecting their individual stakes in the joint venture, with Glimcher relying on funds from its line of credit for its part of the equity contribution. To solidify the acquisition agreement, the joint venture made a non-refundable, $10 million earnest money deposit. Upon the deal’s completion, Glimcher will take on leasing and management responsibilities for the two-segment shopping mall, which is presently 99 percent leased to a long list of tenants that includes anchors Macy’s and Sears.

Relying on tourism as its main economic driver, Honolulu has not escaped the impact of the recession and job losses, yet its retail market is strong, particularly in comparison to other major metropolitan areas on the mainland. At the mid-year point, the average vacancy rate in Honolulu was an enviable 3.41 percent, according to a report by real estate services firm Colliers Monroe Friedlander Inc.

Other properties that have traded in the Greater Honolulu area this year include the 170,300-square-foot Waianae Mall, a 92 percent-leased property that was snapped up by TNP Strategic Retail Trust Inc. for $25.7 million in June, and the 180,000-square-foot Mililani Shopping Center, which Stoneridge Capital Partners acquired for $50.3 million in cash. The Pearlridge transaction is scheduled to close in the fourth quarter of this year.