Magazine article Real Estate Issues

Creative Counseling: Preserving the Hawaii Opera Theatre

Magazine article Real Estate Issues

Creative Counseling: Preserving the Hawaii Opera Theatre

Article excerpt

BACKGROUND

IN MAY 2010, Karen Char, CRE, president, John Child & Company, Inc. and Christine Camp, CRE, president and CEO of Avalon Group, LLC, both of Honolulu, were honored by The Counselors of Real Estate[R] with the 2010 James Felt Creative Counseling Award for their work developing and implementing a long-term real estate strategy for the Hawaii Opera Theatre (HOT) in Honolulu. Their work enabled HOT to continue to produce outstanding opera performances and nationally recognized educational programs in Hawaii. The Felt Award recognizes credentialed members of The Counselors of Real Estate whose work most exemplifies excellence and ingenuity in real estate counseling resulting in far-reaching and long-term benefits to a community and its citizens. The following case study describes the process through which HOT was able to turn a liability into an asset.

INTRODUCTION

CHAR AND CAMP'S WORK FOR HOT spanned a four-year period that began in 2005 when Char joined HOT's board of directors. At the time, HOT was faced with making significant cost cuts in order to continue operating. Camp joined the board in 2008. Together, they were able to uncover assets belonging to the opera theatre and develop a plan that included moving its administrative and box offices to a safer, larger location along a major traffic artery and building a more appropriately sized rehearsal hall.

The full plan developed by Char and Camp involved relocating offices, renovating existing property, selling property and obtaining a line of credit. Today, the 51-year-old Hawaii Opera Theatre is maintaining its performance schedule as well as its educational programming.

CASE STUDY:

COUNSELING FOR HAWAII OPERA THEATRE

In 2005, at my first meeting as a new member on the board of directors of HOT, it was explained that financial exigencies required us to consider selling the medical office building that had been donated to HOT. At subsequent meetings, the likelihood of this sale was reaffirmed. HOT, like many performing arts organizations, faced significant challenges in its operating cash flow. However, HOT owned the fee simple interest in two properties:

* Waimanu property

* Beretania Medical Plaza (BMP)

HOT performs at the NBC Concert Hall in Honolulu. Both properties are about two blocks from the Concert Hall.

WAIMANU PROPERTY DESCRIPTION AND CHALLENGES

The Waimanu property was a consolidation of shabby industrial warehouse properties that housed HOT's administrative and box offices, rehearsal hall, shop and storage. The property had front parcels and a back parcel; no on-site parking. The buildings were originally constructed between 1936 and 1955.

In 2005, the Waimanu property was in disrepair. Despite significant repairs to the roofs twice in the preceding ten years, they leaked whenever it rained and mold was growing in the ceiling tiles and walls. The buildings were clearly in need of major repair, maintenance and renovation to comply with current building code requirements. The health and safety of the staff, volunteers and artists were a major concern.

Historically, HOT had been opposed to financing any capital improvements, repairs or maintenance of its real estate. Instead, HOT had solicited several major benefactors for donations to renovate the Waimanu property--without success. As a result, some board members believed the property was too expensive to renovate and maintain, and strongly advocated selling it and moving out.

As a result, no action was taken and no repairs were made to the Waimanu property. When it rained, furniture was moved, and buckets were strategically placed to catch the water.

BERETANIA MEDICAL PLAZA DESCRIPTION AND CHALLENGES

Beretania Medical Plaza (BMP) was a poorly maintained leasehold medical/dental office building. The leased fee interest in the land was donated to HOT in 1995. …

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