The Benn Pacific Blog

Monday, February 23, 2015

Foreign investors in Hawaii.

Great statistics in PBN today by Duane Shimogawa! 
Feb 23, 2015

Duane ShimogawaReporter-
Pacific Business News

Japanese residents were the top foreign buyers of Hawaii real estate in 2014 with 291 purchases for a total of $278 million, according to Title Guaranty.  Mike Imanaka, senior vice president of data services for the Honolulu-based title services company, told PBN that the Japanese continue to value Hawaii real estate, especially in Waikiki, with its proximity to the beach and shopping.  The Japanese also are interested in Kakaako, Imanaka said.  “When the ONE Ala Moana [luxury condominium] was developed, it provided the perfect opportunity for continued value-based investment and proximity to shopping,” he said. “Japanese investment will likely continue in the Kakaako area.”

Rounding out the top five purchases by foreign investors last year were Canada (213 purchases, $165 million); Singapore (15 purchases, $57 million); China (15 purchases, $25 million); and Hong Kong (13 purchases, $14 million).  Korea, Australia, Germany, Guam and New Zealand rounded out the top 10 among foreign investors, Title Guaranty said. 

Investors from Canada topped the list for buying property on Maui (94 purchases, $84 million); the Big Island (55 purchases, $52 million); and Kauai (12 purchases, $7 million). The Japanese were the biggest foreign buyers of property on Oahu (260 purchases, $254 million).

Despite the interest by foreign investors, domestic investors dominate the market. Title Guaranty reported 13,457 purchases by Hawaii investors for a total of $7.2 billion last year. They were followed by California (1,462 purchases, $1.2 billion); Texas (313 purchases, $205 million); Washington state (306 purchases, $227 million); and Colorado (156 purchases, $144 million).

Duane Shimogawa covers energy, real estate and economic development for Pacific Business News.

Posted by Trevor Benn on February 23, 2015 at 08:32 AM
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Tuesday, February 10, 2015

We Go Buy: Being Prepared

We Go Buy: Being Prepared
written by Ryan Oda, RA, MAT (.(JavaScript must be enabled to view this email address))

Searching for a home can be an emotional roller coaster. Honolulu’s real estate market is competitive. Prices are increasing and good properties are scarce. This is creating overbid situations. During my last transaction, I asked myself, “What can I do to help my buyer get that extra edge?”

Benjamin Franklin once said, “By failing to prepare, you are preparing to fail.” Think of this like taking a test. The more one studies, he or she will probably score well. If that person were to wing-it, he or she will probably fail. The same applies to purchasing a home.

Being prepared includes the following:

1. Getting prequalified. “Luck” can be defined as, “preparedness meets opportunity.” If you are looking at properties you are not qualified for, you are preventing yourself from finding your luck.
2. Knowing exactly what type of home you want. Clearly defining what you want will allow our team to better tailor your search.
3. Understanding the market. What are the trends?

How do we prepare for you? Benn Pacific Group’s agents are active real estate practitioners in this market. The reputation we have developed with other fellow Realtors can be the difference in getting the deal or not.

Posted by Trevor Benn on February 10, 2015 at 11:01 AM
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Thursday, August 15, 2013

Cash Buyers Overtaking the Market

This from the Wall Street Journal Blog today: WSJ Blog Link: Half of Homes Being Purchased With Cash

This is happening in our backyard as well!  As I look at the properties we have sold in the past year and what is in escrow now, a large portion of them are all-cash transactions.  Who says there is no money out there?  I think it’s just been sitting on the sidelines waiting for the market to settle.  But why not take advantage of these historically low interest rates?  Well, I think they are presenting offers all-cash to beat the competition and will extract the equity later, if needed.

Posted by Trevor Benn on August 15, 2013 at 09:03 AM
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Wednesday, April 10, 2013

Buying a home that is not for sale

In the current market, inventory is tight and many Buyers are getting shut out from properties that suit them because of stiff competition.  At Benn Pacific Group we often utilize methods for tracking potential sales (lis pendens filings, foreclosures, lease/fee conversions).  We also focus on neighborhoods that our clients want and solicit potential sellers via direct mailings.  These letters often describe the client’s needs and their financial abilities and highlight their attributes.  This is happening across the US and CNBC just wrote about it today in an online article.
See here:  CNBC article

Posted by Trevor Benn on April 10, 2013 at 07:51 AM
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Tuesday, March 05, 2013

Howard Hughes Corporation Letter to Shareholders

The following is an excerpt taken from a letter to Howard Hughes Corporation Shareholders from the CEO, David R. Weinreb on March 5, 2013 which speaks to their holdings in Kakaako (former Victoria Ward holdings):

In Honolulu, we are preparing to break ground this summer on ONE Ala Moana (, a 206-unit luxury condo tower that is being developedin partnership with Honolulu-based developers Kobayashi Group and TheMacNaughton Group. These talented and highly respected local developers ledthe acceleration of this development which sold out in two days during themonth of December. Units at ONE Ala Moana sold for an average price of $1.6 million, or approximately $1,170 per square foot. At an assumed cost ofapproximately $900 per square foot, including the value of our air rights, theproject is anticipated to generate approximately $66 million in total profit. At the closing of the construction loan, The Howard Hughes Corporation will receive $47.5 million of proceeds for its air rights. In addition, at project completion, we expect that the company will have received approximately $73million of total proceeds. This asset has a book value of $22.8 million.

The strong response at ONE Ala Moana is good news for Ward Village, one of the company’s key value creation opportunities. In its current state, Ward Village generates approximately $23 million of annual net operating income. However, Ward has an approved master plan that allows for up to 9.3 million total square feet of mixed-use development, including more than 4,000 residential units and approximately 1.5 million square feet of retail and other commercial space. Ward Village has development rights for 22 high-rise towers in an urban master planned community setting. Over the next decade, Ward Centers will transform into Ward Village, a vibrant neighborhood complete with unique retail experiences and exceptional residences set among dynamic public open spaces and pedestrian-friendly streets. In October 2012, we announced plans tomove forward with the first phase of Ward Village, which will consist ofapproximately 500 market rate condominium units and at least 125 workforcehousing units. We also commenced the redevelopment of the historic IBM Building into a contemporary information and sales center, which will showcase the unparalleled neighborhood we are creating at Ward Village.

While we have not yet determined pricing for our first phase towers, market data suggest that comparable existing “front row” product with unobstructed ocean views re-sold in 2012 at an average price of approximately $1,400 persquare foot. Hokua, which is a condominium tower adjacent to Ward, resells atthe highest average price per foot of any condominium tower in Honolulu,approximately $1,400 per square foot. Hawaii’s residential market ischallenged by supply. Economic forecasts indicate approximately 20,000 housingunits must be delivered to meet demand by 2020. This has led economists toproject home prices will increase as much as 40% in the next few years. Themarket will be extremely challenged to deliver this supply given the hurdlesthat must be overcome to achieve development entitlements, which gives WardVillage new product a significant competitive advantage.

In the same way that buyers pay substantial premiums to live in Summerlin or The Woodlands, by delivering a comprehensive master planned communityenvironment that no other competitor can deliver, we expect Ward Village to capture similar premiums and generate substantial value over the life of the project not only for our shareholders, but also for the new residents. I encourage each of you to follow our progress by visiting our website

Posted by Trevor Benn on March 05, 2013 at 03:39 PM
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Hawaii’s largest indusrial landowner charged with mismanagement

As a stakeholder and an outside observer, the recent moves by the Commonwealth Fund (CWH) are disturbing and disappointing.  This entity was the buyer of the former Damon Estate lands (Mapunapuna) and the former Campbell Estate industrial lands.  These acquisitions make them the largest industrial landowners in Hawaii.  Over the past years they have been mired in mismanagement including:

1) Creating a separate company to handle the property management which is owned by the Chairman of the Board of CWH.
2) Splitting the REIT into three entities and divesting the properties into these Trusts but NOT giving shareholders proportionate shares in the offshoot entities.
3) Altering the Trust’s Bylaws to ensure that shareholder rights are suppressed.
4) Diluting the shares of the Company to fight off shareholder advocates.
5) Ignoring a tender offer that is 25% higher than their IPO pricing they are undertaking currently.

To learn more I invite you to read this blog from the Wall Street Journal:
Link to Wall Street Journal Blog


Posted by Trevor Benn on March 05, 2013 at 08:04 AM
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Wednesday, December 12, 2012


What’s the best economic indicator of the health Hawaii’s real estate industry?  How about an error by the Star Advertiser in running an ad for the sales of the ONE Ala Moana condominium on Friday last week instead of Monday as scheduled, thus forcing the developer to go to market 3 days earlier than planned.  End result?

206 units sold out almost instantly with an average price point of approximately $1,500/sf and a maintenance fee estimated to be on the north side of $1/sf per month.  Even the Penthouse units in the $8-9 Million range…gone.  That pace of sales beats any absorption rate I have seen in years.

ONE Ala Moana promises to be one of the first in what appears to be the pending boom in condo development in the Kakaako to Waikiki area.  What makes this one so unique is its location on top of the existing parking structure of Nordstrom at Ala Moana.  This means residents will be able to go out their door to the world’s largest open air shopping center or out the back to the Keeaumoku/Kapiolani corridor.  Paired with valet parking for residents, lots of amenities (including a simulated golf driving range) and a relatively small number of units, ONE Ala Moana may just be the hottest address in town!

inventory at ONE Ala Moana

Contact us for more information on this and other condos coming soon to Kakaako!


Posted by Trevor Benn on December 12, 2012 at 08:41 AM
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Friday, October 26, 2012

Hawaii #1 for holding real estate in an LLC

The Wall Street Journal reported that Hawaii has the highest percentage of homebuyers holding title in LLCs.  If you are looking for certain privacy and protections you might consider holding title in an LLC… of course, consult your financial and legal advisors before doing so!

Wall Street Journal Article.

Posted by Trevor Benn on October 26, 2012 at 09:04 AM
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Thursday, September 13, 2012

FED announcement

This morning the Federal Reserve announced its continued stimulus of the US economy by affirming a commitment to purchasing $40 Billion a month of mortgage-backed securities and re-investing the returns off of previous investments by purchasing another $45 Billion in similar securities.  This amounts to an $85 Billion-a-month pledge and it is open-ended until it’s satisfied that economic conditions have improved. 

Additionally, on the call, it announced that it plans to keep the Fed funds rate at essentially zero and intends to keep it there through at least mid-2015.

What does this mean?  Well, it is evident that the Fed believes the best impact on job growth and economic recovery is at least partially through the housing market which is continuing to recover.  In short, the more people that stay out of foreclosure… the better for the overall economy.  The more people that can refinance their existing mortgages into lower payments, the more money they have to spend elsewhere.  The lower rates also are an encouragement for consumers and businesses to lever up, borrow more and invest in growing their companies, buying assets, etc.  The 2015 forecast is a message that you will have this window of opportunity for another 3 years!

How do I profit from this? 
If you have a mortgage that would be lower at today’s rates you should consult a lender and see if that would make sense. 
If you want to up-size your home you should call us and see what your money can buy and what your current home could sell for.
Increase your leverage if you are comfortable with the payments and purchase more real estate or other assets that you think will appreciate or cash-flow at a rate higher than the cost of those funds.

Future inflation?
Many are predicting that the longer term outcome of this is much higher inflation.  I have been talking about this for a while.  If this happens, you want to own real estate.  Real estate is an inflation hedge for several reasons:
1) Your payments are fixed.  If you have a $2,000 a month 30-year fixed mortgage, that payment is unchanging for 30-years.  If inflation occurs, the dollar will weaken and the costs of goods and services will go up in price but you might not care as your income should also be rising in that environment.  However, the mortgage payment you have does not inflate with the cost of everything else.  It is fixed so you might be paying back that mortgage with “75 cent dollars” (your devalued dollars).
2) Rents are NOT fixed.  This means that while your payments are fixed for 30 years and not subject to inflation…your rents are not.  So you would be increasing your rents to your tenants on your investment properties and widening the gap between your income and your expenses…otherwise known as “profit!”

Trevor Benn (R, GRI, ABR, ePRO, SFR)
Principal Broker - Benn Pacific Group Inc.


Posted by Trevor Benn on September 13, 2012 at 07:56 AM
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Wednesday, September 12, 2012

Trying to avoid possible tax changes?  You may need to sell now.

With the election looming and the current economic realities, most experts seem to agree that many tax rates will be increasing in 2013.

The new “Medicare” excise tax on high income earners is already set to take effect on January 1, 2013.  In brief, this is an additional tax of 3.8% for individuals with an AGI (Adjusted Gross Income) over $200,000 or couples filing jointly with an AGI in excess of $250,000.  This tax is applied to the income in excess of these income limits… but investment and passive income is also counted in that!  So, the sale of your home (in excess of the exemptions) might be added to that.

The National Association of Realtors® has some scenarios that might help in understanding this tax (click on the link below):
NAR 3.8% Tax Scenerios

Additionally, many think that 2013 will bring even more changes to the higher tax brackets and capital gains rates.  We are recommending our clients review their real estate holdings with us and their estate planning consultants now.  If liquidating any of these assets makes sense for your estate plan, the time to list these properties to close by the end of 2012 is NOW!*


* DISCLAIMER:  Benn Pacific Group Inc. and its agents and affiliates are NOT experts on tax and estate planning matters.  You should consult your CPA and/or tax/estate planning attorney for advice prior to making an investment decision.


Posted by Trevor Benn on September 12, 2012 at 11:29 AM
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