CBRE has been retained by the City and County of Honolulu (the “Seller”) as the exclusive consultant for the sale of the long term leasehold interest in its Affordable Housing Projects (the “Projects” or the “Properties”), comprised of 12 distinctive apartment buildings containing 1,257 rental units, commercial space and parking areas. This one of a kind offering will provide the purchaser with long term, stable cash flow in a market containing high barriers to entry and high demand by tenants, while ensuring the City and County of Honolulu can continue providing its residents with quality affordable housing.
Significant barriers to entry - The combination of a growing local population and continual in-migration of new residents from throughout the Pacific Basin, puts severe stress on Oahu’s land resources that are needed to accommodate affordable housing in its urban areas, making developable land unaffordable and hard to obtain.
Economies of scale - Acquiring the Portfolio will allow the lessee to operate at high levels of efficiencies with economies of scales thereby positively affecting all facets of operations that grow bottom line profitability.
Long term favorable lease - The Properties will be offered under long-term ground leases that may be structured with nominal annual lease rents. By operating the Properties as qualifying "housing projects" under regulatory agreements with the City, the acquirer may annually file a claim of exemption from real property taxes. Further, in certain circumstances, nonprofit entities and for-profit entities that carry out new construction or moderate or substantial rehabilitation of eligible housing projects may claim exemptions from Hawaii State General Excise Tax from the Department of Taxation. These opportunities may allow the acquirer to obtain very attractive financing for the Properties while preserving affordability.
Strong market indicators - Hawaii is benefitting from an economic resurgence with a strong performance in tourist related industries and tax collections. Federal expenditures have increased as military installations receive continued infrastructure upgrades and redeployment of various specialty divisions to Hawaii bases. Major County and State capital expenditures continue to create momentum in Hawaii’s economy.
Strong demand - Hawaii's high cost of living, combined with the nation's highest median single family home and second highest condominium prices, result in the third lowest home ownership in the nation. This premium cost of housing puts incredible demand on rental housing, as demonstrated by the City and County's 96% occupancy rate in its housing portfolio and the Honolulu market 1 bedroom monthly room rate average of $1,570.