This week I attended an informational meeting at Jefferson Elementary School on the Lease to Fee Conversion of the remaining Leasehold units at Foster Tower, Liliuokalani Gardens, Waikiki Banyan and Waikiki Sunset.
The reason I went was twofold:
1. Learn about the process for the remaining Lessees that wish to purchase the fee
2. Learn about the investment opportunity for 3rd party investors to purchase the fee
The meeting was hosted by Peter Savio of Savio Realty LTD as they are the exclusive brokerage representing Liliuokalani Trust in the sale of these remaining units.
Peter Savio at Jefferson Elementary discussing Lease to Fee Conversion
Liliuokalani Trust hired the right guy for the job as Peter Savio has literally done thousands of these unit conversions over the years. He weighed out the pros/cons and options the Lessees (that have not already purchased the fee to their unit) have:
- They can Buy the Fee
- They can remain in their unit and surrender the improvements when the lease is up
- They can sell now (as leasehold) and offer the fee purchase simultaneous to a Buyer
He also made it quite clear that this is the 4th (and most likely the last) offering to the lessees. Roughly 90-95% of the owners in the buildings have already taken advantage of the opportunity to buy, so it gets more costly due to smaller scale for Liliuokalani Trust to go through this process each time. Thus - after this last shot, the fee interest will be available to 3rd party investors.
The deadline for the Lessees to go to contract is November 27, 2018 and the closing deadline is February 25, 2019. After that, the trust plans to put fee interest in those units available to 3rd party investors.
Here's the takeaways I got in each tower:
The Foster Tower fee purchases were by far the highest due to the location and views from the building. Studio units start at $287,300-$290,500 on the lower floors, ranging from $600k + for the fee on 1 bed units and the Penthouse units were well over $1 million. The land lease expires in 2034.
There are 18 units remaining with the land lease expiring in 2039. The Fee purchase on the studios ranged from $117,000-$120,000, 1 beds $191,000-204,000 and 2 beds $309,000.
There are 45 timeshare units where the fee purchase is available today to 3rd party investors. There's an additional 20 units (65 total) being offered to lessees and the land lease expires in 2035. Since all the units are 1 bedrooms at Waikiki Banyan, they were all being offered for $191,500 each. The penthouse units which were slightly higher, which from experience probably has to do with the higher ceilings.
95% of the fee simple interest has already been sold to lessees in the past. Only 20 remain leasehold and the land lease expires in 2036. The fee purchase on the 1 bedroom units is $183,000 and $216,200 on the 2 bed units.
Have more interest?
If you're a lessee and have more interest in purchasing the fee before it's too late or a 3rd party investor interested in picking up the fee interest in one of these prime Waikiki Condos, feel free to contact me for more information.