Honolulu Real Estate Partners VIII L.P., which is in the process of acquiring Mitsui Trust & Banking Co.'s interest in the marketplace, said the state has asked them to bring in a new management firm with experience in running festival marketplaces such as Aloha Tower.
The partnership, which is led by Maui developer Everett Dowling, has had preliminary discussions with companies such as Rouse Co., said company attorney Rick Tsujimura. Rouse developed Boston's Faneuil Hall, Baltimore's Harborplace and New York's South Street Seaport. Founder James Rouse, who died in April, was one of the original partners in the Aloha Tower venture.
Honolulu Real Estate Partners - whose partners also include Goodfellow Bros. of Maui and officers of the Albert C. Kobayashi construction firm - is purchasing Mitsui's $60 million mortgage to the property, which sits on state land in Honolulu Harbor.
The current marketplace manager is Aloha Tower Associates, developer of the complex.
Honolulu Real Estate Partners also may replace Aloha Tower Associates as the lessee at the marketplace if the mortgage sale goes through, Tsujimura said. Honolulu Real Estate Partners and Mitsui said they plan to complete the deal by the end of the year.
Aloha Tower Associates has pledged to work with the partnership. ATA continues to hold the future development rights on the waterfront property, which includes the rights to build condominiums, office space and a hotel.
The disclosure comes as the Aloha Tower Development Corp., the state agency that oversees construction of the marketplace, is considering modifications to the lease arrangement between the developer and the state.
Mitsui yesterday outlined a new lease plan that would increase the base rent for the marketplace from the current $1 million a year to $1.68 million in 1997, $1.73 million in 1998 and $1.79 million in 1999. After that, the base rents will drop to $500,000 a year for the years 2000 through 2002, before rising to $827,000 a year for the years 2003 through 2012.
The lessees also will pay the state 2 percent of the center's adjusted gross revenues for the years 2003 to 2012.
Bill Whitney, a consultant for ATDC, said over the long term, there is very little difference between the two leases.
Under the proposed new lease, the state will collect $21.95 million in base rent over the next 20 years, while the state will collect $22.76 million during the same period under the current lease terms, he said.
The lease renegotiations come amid a messy legal dispute between Mitsui and Aloha Tower Associates.
Mitsui in August filed a foreclosure suit against the developers, saying they failed to make payments on the $60 million loan.
That came after Aloha Tower sued Mitsui in May, alleging that the lender reneged on more than $600 million in financing.
Both sides have said that the litigation shouldn't affect the daily operations of the complex.
The ATDC will meet again on Dec. 18 to discuss progress of the lease negotiations, which the state hopes to complete in two months.