Client: Kamehameha Schools
Portfolio: Kalani Properties, Kalihi, Oʻahu
Property type: Industrial, warehouse, office and retail
Assignment: Ground lease reversion, tenant evaluation and leasing strategy
Brokerage: Colliers Hawaiʻi, Hawaiʻi Industrial Advisors team led by Alika Cosner
Executive summary
When Kamehameha Schools prepared to take ownership of a 219,000-square-foot commercial and industrial portfolio in Honolulu’s Kalihi district following a ground lease reversion, it faced a complex challenge: transitioning more than 80 existing tenant leases under an exceptionally tight deadline.
With just three months to execute, the Hawaiʻi Industrial Advisors team developed a comprehensive strategy to evaluate tenants, prioritize retention, address property concerns, and negotiate new leases. A detailed tenant retention matrix and temporary leasing strategy helped streamline decisions, maintain business continuity, and balance immediate operational needs with long-term ownership objectives.
The team also identified opportunities to improve property performance and align the tenant mix with Kamehameha Schools’ mission. Strategic planning, disciplined execution, and collaborative problem-solving transformed a complicated ground lease reversion into an opportunity to strengthen this commercial real estate portfolio.
The challenge: Decades of complexity, months to act
When a long-term ground lease approaches expiration, landowners face a complex set of decisions. Buildings developed and operated by another party bring a history of existing occupants, aging infrastructure, maintenance concerns, and a new set of leasing responsibilities.
For Kamehameha Schools (KS), the reversion of its Kalani Properties portfolio in Honolulu's established Kalihi industrial district presented these challenges on an extraordinary scale.
The 219,000-square-foot portfolio encompassed five property groupings, ranging from small-bay industrial warehouses to multistory mixed-use buildings. Its occupants represented a diverse cross-section of Hawaiʻi's economy, including distribution companies, contractors, automotive businesses, food producers, retailers and creative enterprises.
As the ground lease approached its expiration, more than 80 existing tenant leases required evaluation and transition. Many were scheduled to expire shortly before the properties reverted to KS, leaving an exceptionally narrow window to establish new arrangements. The Hawaiʻi Industrial Advisors team at Colliers, led by industrial specialist Alika Cosner, faced a compressed execution period of approximately three months.
The challenge extended far beyond preparing lease documents. The team needed to assess existing tenants, evaluate property conditions, understand compliance issues and help KS determine which occupants were best suited to its long-term objectives.
The assignment wasn’t simply to transition more than 80 leases. It was to help Kamehameha Schools make informed decisions about the future of an entire portfolio—without losing critical time.
The strategy: Evaluate before negotiating
With dozens of tenants requiring attention simultaneously, approaching each lease as an isolated transaction would have created unnecessary delays and inconsistent decision-making.
Instead, Hawaiʻi Industrial Advisors developed a coordinated tenant evaluation strategy. The team gathered information about existing occupants, reviewed rental arrangements, conducted property inspections and assessed factors that could influence each tenant’s suitability for continued occupancy.
A central component of the strategy was a color-coded tenant retention matrix. This framework allowed the team to evaluate tenants against consistent criteria, including their rental rates, payment histories, business operations, property conditions, compliance concerns and compatibility with KS’s objectives.
Tenants were categorized according to their retention potential, allowing the team to distinguish between desirable occupants, those requiring further evaluation or negotiation, and those who might be better replaced.
The matrix also created a more efficient decision-making process for ownership. Rather than presenting dozens of individual leasing questions as they arose, Colliers could organize its findings, recommend priorities, and establish a coordinated approach with KS.
This enabled the team to focus its limited time on the decisions most consequential to the portfolio’s transition and long-term performance.
The execution: Creating continuity under a compressed deadline
The reversion created an immediate operational challenge: the existing leases were expiring, but preparing and executing more than 80 permanent KS lease agreements within the available timeframe was impractical.
The team developed a temporary leasing strategy to bridge the transition. Short-form agreements provided a mechanism for selected occupants to continue operating while the parties worked toward longer-term arrangements.
This approach created breathing room for both the owner and its tenants. For KS, it provided additional time to evaluate permanent lease structures, address property concerns and negotiate terms aligned with its objectives. For existing businesses, it offered a path toward continuity during an otherwise uncertain ownership transition.
Meanwhile, the Hawaiʻi Industrial Advisors team coordinated multiple workstreams involving tenant communications, inspections, lease reviews, negotiations and ongoing collaboration with ownership.
The assignment required the team to balance urgency with due diligence. Moving quickly was essential, but so was avoiding decisions that could create costly problems for KS years later.
Beyond leasing: Identifying risks and opportunities
The Kalani Properties portfolio presented a range of physical and operational considerations. Some buildings offered highly desirable industrial features, including substantial ceiling heights, flexible warehouse configurations and convenient access to Honolulu Harbor and major transportation routes.
Others presented challenges involving deferred maintenance, limited parking, building age, access constraints or configurations that reduced their appeal to certain tenants.
For example, the Moowaa warehouse properties offered opportunities to accommodate smaller industrial businesses, while the mixed-use buildings along Waiakamilo Road and Kalani Street could support a broader range of commercial activities.
Hawaiʻi Industrial Advisors evaluated these characteristics as part of its broader recommendations. The team also considered property compliance concerns, environmental risks and potential capital improvements that could influence future leasing decisions.
These assessments were particularly important because the properties had been developed and operated under a ground lease dating back decades. Responsibilities for maintenance, improvements and property condition could be complicated by provisions established long before the reversion.
By identifying issues early, the team helped establish a clearer understanding of the properties KS would be assuming and the decisions required to manage them effectively.
Aligning the portfolio with a larger mission
For Kamehameha Schools, commercial real estate serves purposes beyond generating rental income. Its properties also provide opportunities to support Hawaiʻi’s businesses, strengthen local economic activity and advance broader organizational priorities.
That made tenant selection an especially important consideration. The Hawaiʻi Industrial Advisors team evaluated how the portfolio could accommodate industries aligned with KS initiatives, including food systems and creative enterprises.
The Kalani Properties portfolio offered opportunities to support these uses through its combination of warehouse, production, distribution, retail and office space. Rather than simply pursuing the highest-paying tenant for every vacancy, the team considered how the right mix of occupants could support both sustainable cash flow and the owner’s longer-term goals.
Lease terms also required strategic consideration. With KS evaluating the portfolio over an approximately 10-year planning horizon, the team needed to balance income stability with flexibility for future property decisions.
The resulting approach recognized that the most valuable lease isn’t necessarily the one with the highest initial rent. It’s the agreement that best supports the owner’s financial objectives, risk tolerance and plans for the asset.
The outcome: A framework for long-term portfolio performance
The Kalani Properties assignment illustrates the value of approaching a ground lease reversion as a strategic asset transition rather than a collection of individual leasing transactions.
Facing more than 80 tenant decisions and a compressed timeline, HIA developed a coordinated framework for evaluating occupants, prioritizing negotiations and addressing immediate leasing needs while keeping longer-term objectives in view.
The tenant retention matrix gave ownership a structured basis for decision-making. The temporary leasing strategy created a practical path for managing the transition. Property-level assessments helped identify risks and opportunities that would influence future leasing and investment decisions.
Together, these efforts established a foundation for managing the portfolio beyond the reversion deadline.
The greatest value wasn’t simply moving leases from one landlord to another. It was creating a strategy that allowed Kamehameha Schools to make deliberate decisions about the properties, tenants and opportunities it was inheriting.
The takeaway: A ground lease reversion should never be a last-minute exercise
Ground lease reversions can create significant opportunities for landowners, but they also introduce risks that are easy to underestimate.
Existing tenants may have leases that expire at different times or contain provisions that complicate the transition. Buildings may have deferred maintenance or compliance concerns. The incoming owner may have limited familiarity with the occupants or the physical condition of the assets. And every decision must be considered in the context of the owner's plans for the property.
The Kalani Properties experience demonstrates why early planning, disciplined tenant evaluation and coordinated execution are essential.
For property owners anticipating a ground lease reversion, the most important question isn’t simply how to transfer the leases. It’s how to use the transition to position the property for what comes next.
Alika Cosner is Senior Vice President at Colliers Hawaiʻi, specializing in industrial landlord representation, portfolio strategy and complex leasing assignments. His team, Hawaiʻi Industrial Advisors, supports institutional and private property owners on positioning their assets, navigating changing market conditions and developing leasing strategies that support long-term value.