Condo Tower Gets New Name, New Money

by James L. Magin, Pacific Business News
The San Diego development company that bought the unfinished Moana Vista condominium tower plans to spend $110 million to restart and upgrade the project, now known as Pacifica.
Pacifica will create work for dozens of local companies and generate 400 construction jobs over the next two years, its new owner says.
OliverMcMillan is redesigning the 46-story building’s exterior, unit mix, layout and ground-floor retail space to give it a higher-end feel, and adding 4,000 square feet of amenities on a fifth-floor recreation deck.
The firm is working on obtaining approvals for the changes from the Hawaii Community Development Authority and expects to restart work on the project in March.
The project represents a foothold in Hawaii for OliverMcMillan, a 31-year-old development firm that specializes in urban mixed-use communities.
The firm, which has formed a Hawaii-based subsidiary, OliverMcMillan Pacific, has already been talking to large local landowners Kamehameha Schools and Queen Emma Land Co. about mixed-use projects in Kakaako and Waikiki.
“We’ve been looking for a project for quite some time to enter the market,” said CEO and founder Morgan Dene Oliver, who plans to purchase a unit at Pacifica for his own use. “Until this project, we had not found the right opportunity.”
OliverMcMillan picked up the half-finished Moana Vista project earlier this year after buying a $29.5 million lien that had been filed by Hawaiian Dredging Construction Co. OliverMcMillan acquired the interest owned by the project’s original developer, KC Rainbow II.
The firm has so far spent $40 million in cash of a total $150 million estimated cost, Oliver said. First Hawaiian Bank is financing a $50 million construction loan; the balance of the money will be funded in cash by OliverMcMillan and the firm’s equity partners in Boston.
KC Rainbow II owner Fred Chan reportedly lost about $65 million of his own money on the building before selling his interest to the San Diego developers, which means OliverMcMillan acquired the project at a hefty discount.
The developer plans to pass along some of that savings to buyers, starting with the 175 original buyers who had their purchase contracts canceled by KC Rainbow II in September.
The buyers, mostly local people who had put down 10 percent on units ranging in price from $350,000 to $600,000, will start hearing from OliverMcMillan this month and will be given the first shot at purchasing a unit at a discounted price before sales open to the public in late January, Oliver said.
“Our feeling is they hung in there,” Oliver said. “They will have the opportunity to buy the units below what the other units are trading at.”
Prices for the units, which are being reconfigured from 492 two-bedroom apartments to 489 one-, two- and three-bedroom units, have not yet been set. One change is that 124 units that were previously set aside for reserved affordable rentals will now be for-sale units for owner-occupants.
Heyer and Associates will handle sales and marketing for the project, and First Hawaiian Bank will offer financing for buyers.
The public will “also get a chance to buy at what we believe is a bargain price,” Oliver said.
“It’s a competitive construction market,” he noted. “We will finish this building at a better cost.”
Work stopped nearly a year ago after Hawaiian Dredging and Construction Co. filed a mechanic’s lien against KC Rainbow II for the unpaid bills. The contractor filed for foreclosure in April, and the project was set to go to public auction in September, before OliverMcMillan struck a deal to pay off the lien.
Any subcontractors owed money were paid by Hawaiian Dredging, Oliver said. He said other local firms that were owed back fees, including Architects Hawaii, Ltd., Baldridge and Associates Structural Engineering and Lincolne Scott, were paid in full by OliverMcMillan.
Hawaiian Dredging is no longer associated with the project; OliverMcMillan is bringing Ledcor Construction on as general contractor. The construction company, which signed with the Hawaii Carpenters Union about four months ago, will operate a union job site that’s expected to generate about 400 jobs.
Architects Hawaii, which designed the original building, will continue to work on the project, along with Baldridge and Associates and Lincolne Scott.
OliverMcMillan also brought on New York-based architecture firm Gensler to redesign the public and common element spaces and exterior of the building.
The redesign includes a large motor court entry and a wood and glass lobby space for residents facing the Waimanu Street side of the building.
The 15,000 square feet of retail space facing Kapiolani Boulevard has been redesigned with large glass windows. The exterior of the concrete building, which was originally designed to be painted white, will be painted shades of metallic blue and silver instead, Oliver said.
The recreation deck, which had been designed with only a swimming pool, will also have green space, a large gym, barbecue areas, two small movie theaters, and a party room — a total of 4,000 square feet of extra floor space the developer purchased from the HCDA.
The finishes inside the units will also be upgraded; the firm plans to donate bathroom tile and fixtures and other materials that were already purchased to local charities.
OliverMcMillan is spending about $5 million for the additional amenities, and $1 million on the lobby but Oliver said the firm feels the additional design elements are worth the added expense.
The firm has also hired local interior design firm Philpotts & Associates, which will work with San Diego-based Jules Wilson ID on the interior spaces.
Oliver noted that the market was probably at its worst when the firm started looking at what he called a “broken real estate project” about nine months ago.
“We were able to see there was a viable business opportunity,” he said. “We saw an opportunity to come in with some aloha spirit and solve some problems.”
The company, which has promoted its development Managing Director Dan Nishikawa to run the Hawaii office, sees a future with urban mixed-use projects in Honolulu.
It has already had discussions with the Queen Emma Land Co., which is choosing a master developer for its International Marketplace redevelopment in Waikiki, and also with Kamehameha Schools, which plans to redevelop its Kakaako mauka land into an urban village.
Author Contact Info: James L. Magin, Pacific Business News