By Kathryn Bender, Star-Bulletin
Ala Moana Center, shown here with a view of
the soon-to-open Neiman Marcus department store,
may be put up for sale by its owner, Japan-based
Daiei Inc. Several news reports from Japan say the
center's sale is on the company's agenda.

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Ala Moana Center
sale considered

Owner Daiei Inc. is looking at
options to pare down debt

By Rick Daysog
Star-Bulletin

Faced with a mountain of debt and a sluggish Japanese economy, Daiei Inc. may be selling Ala Moana Center, according to news reports.

But the local managers of the center said the reports are based on speculation.

Kyodo News Service today said that Daiei plans to sell more than $2.7 billion in assets, including Ala Moana Center, as part of restructuring plan.

Ala Moana, the state's largest shopping center, is expected to sell for about $700 million, Kyodo said. Daiei, Japan's largest supermarket chain, also plans to sell two buildings in Tokyo, according to Nihon Keizai newspaper, one of Japan's leading dailies.

The reports, which quoted unnamed company officials, did not identify a potential buyer.

The land sales are part of a plan to pare down Daiei's debt from about $18 billion to about $6.95 billion within four years.

A local manager for Ala Moana expressed skepticism about the news reports. Dwight Yoshimura, Ala Moana's general manager, said today that a proposed sale of the center has been rumored for some time but stressed that Daiei has made no decison to sell.

Yoshimura believes the latest round of stories emerged because Daiei is undertaking a strategic and financial review of its holdings. Yoshimura said that Ala Moana's owners plan to continue to move forward with its ongoing projects and expansions.

"During the past several years, there have been numerous rumors about the sale of the Ala Moana Center because it is Japanese owned," Yoshimura said. "However, this does not represent a decision to sell the center."

A Daiei spokeswoman in Japan told Bloomberg News that the sale of Ala Moana is one of several options that the company is considering to improve its finances.

In February, Kobe-based Daiei said it was considering selling a minority stake in the center through a public offering on the Nasdaq market. The offering, which would raise about $385 million, would allow Daiei to raise money while retaining a majority interest in Ala Moana, which has been valued between $700 million and $1 billion.

The reports come as Ala Moana has embarked on an ambitious expansion program. The center recently announced plans to build a 450-room hotel, an 18-screen theater and major theme restaurants on an area of the mall along Kapiolani Boulevard.

Neiman Marcus Group Inc. is scheduled to open a 160,000-square-foot department store next month while Nordstrom Inc. has announced plans for a 200,000-square- foot department store.

Local marketing analyst Marty Plotnick said a sale of Ala Moana Center would bring new financing to pay for the expansion.

The deal also could bring new energy to the center if the buyer were to hire new managers, said Plotnick, president of Creative Resources Inc. General Growth Management of Hawaii Inc. currently manages Ala Moana.

Daiei acquired full ownership of the 1.5 million-square-foot center in 1995 when it bought a 40 percent interest owned by Equitable Life Assurance for $410 million. Daiei initially acquired a 60 percent holding in Ala Moana 1982 when it teamed with Equitable to buy it for $282 million.

During its peak during the early 1990s, the center generated more than $900 million in annual retail sales but that figure has declined with Hawaii's economic slump.