Moments into a conference call with investors last month, Alexander & Baldwin Inc. CEO Allen Doane let it slip that the company had set up “an opportunistic real estate program” for distressed Hawaii real estate dubbed “Project X.”

In other words, a mini-vulture fund.

Doane did not identify potential properties it was targeting but A&B President Stan Kuriyama said they were looking at “low double-digit to larger triple-digit (presumably millions of dollars) type of investment opportunities.”

A slide that was part of the presentation for investors had listed the size of the entire Project X program at around $100 million.

“(There) are a number and wide range of projects we’re looking at ranging from residential projects, perhaps where developers have been unable to complete the project and are willing to sell their interest at a huge discount to their investment,” Kuriyama said.

“We’re looking at opportunities from landowners that wouldn’t otherwise be available to us but for their own distressed circumstances," he said.

It’s no secret A&B is highly interested in General Growth Properties Inc.’s Victoria Ward lands in Kakaako given the potential for building condominium complexes on the 65-acre parcel, complementing the existing mix of retail and commercial tenants.

In 2002, A&B nearly acquired the Victoria Ward properties for about $200 million before General Growth submitted a winning bid at the last minute.

Given the gloom and doom about the local and national economy, A&B’s willingness to set aside cash is a bullish sign for their future.

They’re probably mindful of the lessons of mid-1990s economic downturn where opportunistic investors like Leon Black’s Apollo Group, California-based Oaktree Capital Management L.P., Bill Mills, Everett Dowling and Trinity Investments Trust L.L.C. made a fortune by investing in distressed local real estate.

Many of those investors acquired steeply discounted real estate from financially troubled Japanese investors only to sell them at huge profits when the economy got better.

Tags: Alexander & Baldwin Inc., Kakaako, Victoria Ward

This entry was posted on Saturday, March 7th, 2009 at 4:24 am and is filed under Biz Bites. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.