Hawaii Kai rentals converted to condominiums
A rental housing complex in Hawaii Kai has been partially converted into condominiums following purchase of the nearly 3-year-old complex by a local development firm.
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A rental housing complex in Hawaii Kai has been partially converted into condominiums following purchase of the nearly 3-year-old complex by a
local development firm.
Honolulu-based Avalon Development recently
acquired 7000 Hawaii Kai Drive from a South Korean company for $137.5 million and on Jan. 13 began advertising sales for some units.
Avalon plans to sell
213 units in one midrise building previously described as luxury rental apartments. A second building with 56 units and parking will remain rentals at moderate rents for
30 years to maintain an
affordable-housing agreement with the city.
Under the conversion, the condo building has been re-branded Hale Ka Lae, while the rental building is now known as Hale Manu.
Avalon has scheduled a lottery for Friday to sell 107 condos reserved for buyers who commit to live in the homes. Prices for these units with two to four bedrooms range from $515,000 to about $790,000.
Another 106 units were mostly reserved previously by investors and existing renters who accepted an offer to buy, according to Avalon CEO Christine Camp.
Camp said Avalon let tenants know about the condo conversion plan in June and tried to minimize displacement by giving
every tenant the first right to buy, discounting prices 3 percent and refunding
15 percent of rent paid over two years if they bought a unit.
About 20 tenants elected to buy, Camp said.
“We’re very pleased that they took advantage of the program,” she said.
Monthly rent for the units converted to condos ranges from about $2,500 to $3,800. The rent rebate at the high end for tenants who bought could have been as much as $12,600.
Camp said Avalon, which under state law needed to offer at least half of the condo project to buyers who intend to live in the units, didn’t evict tenants to make the conversion. She said 7000 Hawaii Kai Drive at its peak was
80 percent leased and that her company didn’t re-rent many units when tenants moved out so at least
107 units would be empty to sell to owner-occupant buyers. Camp said only tenants who were delinquent on rent or caused problems with other residents were evicted.
Some existing tenants are on month-to-month leases after prior long-term leases expired. Camp said investors buying those units might continue to rent to
the tenants. “We hope to match up (investor buyers) with existing tenants who want to stay,” she said.
When 7000 Hawaii Kai Drive opened in mid-2016, it was the first rental apartment complex built in East Oahu in more than a decade.
Avalon developed the project for South Korean- based Hanwha Engineering &Construction at a cost of $168 million. The 10-story complex was built with amenities including outdoor barbecues, pool, Jacuzzi, fitness center, club room, business center, movie theater, concierge and pet spa.
As part of an affordable- housing requirement,
54 units within the two buildings were reserved for residents earning no more than 80 percent of Honolulu’s median income. The limit equates to $65,360 for
a single person to $123,200 for a household of eight. Monthly rent for the affordable two- or three-bedroom units range from $1,449 to $2,800.
Camp said the project was doing fine financially but that Hanwha decided
in late 2017 to sell the project to free up capital. So
Avalon arranged to buy out Hanwha.
Hanwha had previously tried to build a luxury condo also called Hale Ka Lae on the same site in 2011 with 242 units priced from $685,265 to $3.4 million, but a loan commitment fell through and sales were canceled. Prior to that, Hanwha had been an investor in a luxury condo project called Hale Ali‘i planned for the site by local developer Mike Klein, who ran into trouble that included improper treatment of archaeological features on part of what was then a larger property.
Hanwha took control of the property from Klein
and sold 5 acres to a nonprofit that created a cultural preserve on land next to 7000 Hawaii Kai Drive that includes petroglyphs, rock walls and remnants of a coconut grove that some preservationists consider part
of an ancient Hawaiian