‘Plan is to fix what’s there,’ says Dillingham Ranch’s new owner

Historic Dillingham Ranch, the Mokuleia property where local business tycoon Walter F. Dillingham established his home more than a century ago, was sold this spring for $36.5 million to the Nolan family, which has ties to Hawaii and intends to keep it in agriculture.

Peter J. Nolan, the 65-year-old chairman of California-based Nolan Capital, another Nolan family asset, told the Honolulu Star-Advertiser on Thursday that the family has current and previous ties to Hawaii, and many of Nolan Capital’s operating companies are tied to agricultural enterprises and stewardship. The Nolan family even has its own California ranch and vineyard.

“It’s not a piece of property that was bought with an eye toward development, at least not for the foreseeable future,” Nolan said. “I am just a long-term investor, and I’ve done quite a bit in agriculture. So what’s gone on with Dillingham Ranch for the past 20 years is going to continue.

“Really, just the plan is to fix what’s there. The past owners, their primary business wasn’t the business of the ranch. My primary business is the business of the ranch, and there’s quite a bit of deferred maintenance.”

Dillingham Ranch was the largest Oahu land offering at the time of the sale, which closed in March, with 11 parcels on more than 2,700 acres, according to Matt Beall, CEO and principal broker at Hawai‘i Life, which represented Dillingham Ranch in partnership with commercial brokerage Cushman & Wakefield ChaneyBrooks.

The property, which is a favorite venue for the film industry, stretches from the white sands of Kaiaulu Beach to the Waianae Mountain range and the Mokuleia Forest Reserve. A working cattle ranch — as well as the site of the Hawaii Polo Club, a commercial tree nursery, a coconut grove and farmlands — were part of the sale.

It also included Dillingham Lodge, a 3,000- square-foot restored structure with eight bedrooms and a commercial kitchen, a popular wedding and event venue with historic roots. Dillingham was an industrial magnate who formed Hawaiian Dredging Construction Co. in 1902 to dredge Honolulu Harbor. He created the family estate on land his father, Benjamin Franklin Dillingham, acquired in 1897 as part of 10,000 acres known as Ka­wai­loa Ranch, which had 2,000 head of cattle and more than 100 horses and mules.

The sale did not include North Shore Water, which is still owned by prior owner Kennedy Wilson, which has an easement to continue accessing the utility, which is on ranch grounds.

Nolan said, “I think (Dil­lingham Ranch) is a property that could be successful with a little bit of love. I think it’s a stunning, irreplaceable tract of land adjacent to the ocean with spectacular views and a rich history. It’s a very, very cool place, and I think that people know that.

“It’s got a rich history in equine activities, in polo and events. It’s very popular with the film industry, ” he said. “There’s been a lot of major production that is taking place on the island, and hopefully there’ll be more in the future.”

Nolan added, “We’re definitely investing and we’re hiring.”

Nolan said Dillingham Ranch will continue to be managed by Moana Kinimaka, the owner’s representative. He said Kinimaka, who previously managed Dillingham Ranch for Kennedy Wilson, had also previously managed Kealia Properties, a Kauai ranch, for the Nolan family on Kauai.

“After I sold the property in Kauai, she alerted me to the Dillingham Ranch situation, and I bought it,” he said. “I’m not a developer. I’m trying to make it sustainable both environmentally and financially.”

Nolan said part of the appeal of owning Dillingham Ranch for him is that he comes from a farming and business background.

“My dad was a dairy farmer in upstate New York. He was a dairy farmer until lost his arm farming,” he said. “I lived as a kid on the farm for a short period of time. But then I lived in a more of a suburban, middle-class setting. My dad became an agricultural lender and commercial banker.”

Nolan said he graduated from Cornell University with a degree in agricultural economics, which is essentially a business degree.

“I’ve always been around farming. I did go work in finance and in the private equity industry, but I’ve always had investments in agricultural-related properties over the years,” he said. “Now in Santa Barbara County (Calif.) we have a cattle ranch, the vineyard, and we also lease out a chunk of the property to farmers who grow their own crops — so that’s what I do professionally, and that’s what I do for fun.”

According to Nolan Capital’s website, it has sole ownership in Nolan Ranch, a working ranch with agricultural and grazing leases on more than 9,400 acres in the Santa Ynez Valley. There is also a 110-acre vineyard in Santa Maria, Calif., with at least 18 varietals.

Nolan Capital has a controlling interest in C-A-L Ranch Stores, which has 33 locations and 1,100 associates across Idaho, Utah, Nevada and Arizona. It also recently bought Coastal Farm & Ranch, a farm and home retailer in the Pacific Northwest.

It also has a controlling interest in ExplorUS, which operates national, state and other park concessions.

“ExplorUs is a concessionaire to the National Park Service. If you go to the Big Island and go to Volcano House, the public owns the property and the building, but what the National Park Service does is enter into a license agreement or concession agreement with companies like ours and we run the hotel, the restaurant and gift shop,” Nolan said. “We are a trustee of the nation’s assets. We have 62 different parks form Maine to Hawaii, where we certainly would be interested in doing more concessionaire agreements.”

Nolan Capital also has sole ownership in Hermosa Beach Urban Development, a 20,000-square-foot California property with seven contiguous parcels adjacent to Hermosa Pier and that currently houses commercial and residential tenants.

Though Nolan Capital also lists the Poipu Aina Estates on Kauai among its former investments, Nolan said he isn’t a residential developer and became involved in the Poipu project and Kealia Properties, a Kauai ranch, only after other developers had abandoned it, thereby creating an opportunity.

Kathleen Pahinui, chair of the North Shore Neighborhood Board, said the board was aware of the Dillingham Ranch sale and is hopeful that Nolan will provide the community with an update of his plans at his soonest opportunity.

“We just hope that the next time he is in town, we can sit down and get to meet with him and get to know who he is. As long as it stays in ag and he keeps it going as a working ranch, we’re like, ‘OK, that’s good,’” Pahinui said. “From what we’ve heard, he tends to land-bank. He does own a couple of ranches. He also built some housing on Kauai. But we don’t know what the future holds. It’s an unknown quantity for now.”

Pahinui said Oahu’s North Shore community has closely tracked the fate of the storied Dillingham Ranch over the course of several different owners, including some with development plans that did not always align with the interests of the greater community.

A Milwaukee insurance firm bought the ranch in 1979. In 1987, Japan-based Sankyo Tsusho Co. bought the ranch for $15 million and pursued resort and golf course development plans staunchly opposed by the community in the early 1990s.

In 2002, Washington- based Metropolitan Mortgage & Securities Co. acquired most of the ranch property with plans to rezone the land around a common theme such as a “private club or an equestrian based community.”

Metropolitan filed for bankruptcy in 2004, and the ranch was seized by insurance regulators and offered for sale, which led to acquisition by the current seller, Beverly Hills, Calif.-based real estate investment and development firm Kennedy Wilson, which bought the ranch in 2006 for $26 million, according to property records.

Kennedy Wilson’s pursuit of potential development routes created pockets of controversy in the North Shore community. In 2008 it proposed developing 77 house lots while expanding cattle operations. DPP tentatively approved a subdivision with Agriculture Department support, but Kennedy Wilson dropped its plan amid the Great Recession.

In 2014, Kennedy Wilson submitted a new application to create 106 house lots, but that expired without approval amid Agriculture Department concerns.

Eventually, Kennedy Wilson gained entitlements to create 70 house lots on land zoned for agriculture, which if developed at the time would have been the largest “farm dwelling” subdivision on Oahu. But the issue was a contentious one, with developers around the state criticized for establishing residential communities on farmland under lax state and county regulations that allow homes as accessories to agricultural activity.

Ultimately, Kennedy Wilson, who tried to sell the property multiple times during its ownership, never developed the home lots, and the approval lapsed.

Beall with Hawai‘i Life said he expects the current sale will keep Dillingham Ranch a working ranch.

“Speculatively, it would require a lot of effort to do any substantial change. Kennedy Wilson, the seller, had a tentative subdivision approval that they in the process let lapse, and I don’t have information that the buyer has any interest in pursuing that. To my knowledge, the buyer has no interest in doing a tentative subdivision. Every parcel included in the trade was zoned agriculture. At this point you’d be starting from scratch to do an agricultural subdivision.”

Beall added that developing any kind of subdivision on the property would require significant infrastructure investment.

“Even if, and this is pretty unlikely, every authority involved in approving that subdivision were just greenlighting it across the board, it would still be a massive lift logistically. I just don’t think it’s likely, and that’s if you had a property owner that was intending to do that, and I don’t have any indication that is the case.”

Some earlier promotional sales posts from Hawai‘i Life about Dillingham Ranch indicated that some potential buyers had expressed interest in using the subdivision entitlement to pursue conservation easements to preserve agricultural and forestry uses.

Nolan said, “There’s no plan to go after a conservation easement, but it’s always a possibility.”

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Star-Advertiser reporter Andrew Gomes contributed to this story.