A joint venture of Blackstone Real Estate, MW Group and DivcoWest plans to take Hawaii landlord giant Alexander & Baldwin private, gaining control of the state's largest collection of grocery-anchored shopping centers.
The partners said they agreed to buy all outstanding shares of the real estate investment trust's 4 million square feet of commercial space in Hawaii for $21.20 each in cash, 40% more than recent trading, valuing Alexander & Baldwin at about $2.3 billion including debt. Its portfolio includes 21 retail centers, 14 industrial and four office properties, as well as 146 acres of ground lease assets.
The deal reflects Blackstone's appetite for grocery-anchored retail and essential-use industrial properties in supply-constrained markets. Earlier this year, Blackstone completed a $4 billion take-private deal of Retail Opportunity Investments, owner of 93 West Coast grocery-anchored centers.
Public-to-private REIT deals support buyers' efforts to pursue growth through repositioning portfolios, according to the joint venture. And private ownership allows longer investment horizons for capital improvements, it said, without quarterly earnings pressures.
The new ownership group plans to invest $100 million into property investments across the portfolio, enhancements designed to improve tenant facilities and community infrastructure, according to a letter sent to tenants, a copy of which was filed with the Securities and Exchange Commission.
The Alexander & Baldwin board unanimously approved the deal that's expected to close in the first quarter, subject to customary conditions. Alexander & Baldwin would then delist from the New York Stock Exchange.
"As a private company supported by the deep real estate expertise and experience of our new ownership group, [Alexander & Baldwin] will have greater capacity to serve its tenants and communities," Lance Parker, Alexander & Baldwin's president and CEO, said in a statement.
Deal adds to Blackstone's Hawaii real estate
Blackstone owns several hotels in Hawaii, including the Grand Wailea, Ritz-Carlton Maui, Kapalua and Turtle Bay. The firm also owns the Pearlridge Center retail property and residential housing on the island of Oahu.
The agreement "deepens our commitment to Hawaii and our long-standing support for its local businesses," David Levine, co-head of Americas acquisitions for Blackstone Real Estate, said in a statement.
MW Group brings local market expertise. The Honolulu-based firm has developed and managed commercial properties valued at over $1 billion for more than three decades. DivcoWest operates as a vertically integrated investment firm with expertise in innovation markets.
Alexander & Baldwin will retain its name, brand and Honolulu headquarters as part of the deal, according to the SEC filing. A Hawaii-based team would continue leading operations.
Alexander & Baldwin was founded in 1870 by Samuel Thomas Alexander and Henry Perrine Baldwin, who together owned a 571-acre sugar plantation on the island of Maui and later expanded their real estate holdings. Alexander & Baldwin's Hawaiian Commercial & Sugar Co., the last sugar cane farm to operate in Hawaii, closed in 2018.
Divesting businesses
Since 2022, Alexander & Baldwin has divested many of its non-real estate businesses, including construction company Grace Pacific, a hydroelectric power plant on the island of Kauai, a trucking company, a rock quarry on Maui, and a paving company.
In June, Alexander & Baldwin sold its 50% stake in the main source of drinking water for Maui to a local agriculture company for about $55 million, according to Honolulu Civil Beat.
Alexander & Baldwin's largest retail property is the Sam's Club-anchored Pearl Highlands Center in suburban Honolulu, and its second largest is Kailua Town in eastern Oahu.
For its entire retail portfolio, Alexander & Baldwin's three largest tenants are Safeway, Sam's Club and Longs Drugs, according to its latest annual report.
Alexander & Baldwin is expanding its largest industrial property, Komohana Industrial Park in Kapolei, with the addition of two buildings totaling 121,000 square feet.
The company's properties are located on four of the eight main Hawaiian islands, with the largest concentration on Oahu, at about 2.8 million square feet, followed by the islands of Maui, Hawaii and Kauai.