How a Small Real-Estate Developer Is Building a Big Portfolio
HAWAII BUSINESS MAGAZINE
MacNaughton has bought three local hotels, adding to its investments in residential projects, retail and more.
MacNaughton is a relatively small local company, so I was surprised when I added up all the diverse projects it has developed and invested in.
That includes local hotels, housing projects in various price ranges, health care development, a restaurant, insurance company and investments in seven states.
To learn more, I spoke with MacNaughton’s COO, Emily Reber Porter, who has her own vast set of accomplishments: graduate of Punahou, Princeton and Harvard Law, plus 15 years of experience in law, tech and business in Hawai‘i, D.C. and California before she joined MacNaughton in 2015.
She was part of our 2017 cohort of the 20 for the Next 20 and has served on the boards of Punahou, Child & Family Service, Oahu Transit Services, Young Brothers and Kualoa Ranch, and advisory boards for Kupu and UH’s Shidler College of Business. And in case you were wondering what she does with all her spare time, she received an Outstanding Mother Award from the American Lung Association of Hawaii in 2022.
Q: How would you characterize MacNaughton?
Porter: MacNaughton is a family owned, multigenerational real estate development and investment company. Our founder, Duncan MacNaughton, is celebrating 50 years in real estate development and investment in Hawai‘i next year.
We only have about 20 people in our corporate office but are diverse in our expertise and bring in relevant expertise as we need it. We have local values: We all live, work and play here, and have deep connections to the community. We take global sophistication and pair it with local sensibilities.
Q: Why the recent focus on hospitality investments?
Porter: It’s definitely an expansion, but we’ve been involved in hospitality since 2002, when we invested in Twin Farms, Vermont’s only luxury five-star hotel.
In the recent expansion, the hotels we bought are Lotus Honolulu at Diamond Head in 2018, Hotel Renew two years later and then co-ownership of Waikiki Malia and management of all three in 2023.
The hospitality expansion is a natural progression from our development of iconic and innovative residential condominium projects, beginning with Hokua, where our office is, and then Capitol Place and One Ala Moana, and, most recently, the billion-dollar Park Lane Ala Moana.
In those properties, we worked hard to re-envision living in those properties, combining the best of single-family living and condominium living: floor plates, high ceilings, big balconies and amenities, plus the service provided – this concept of residential specialists and bringing in the right people. For instance, the GM at Park Lane Ala Moana has a hospitality background.
It was a natural progression from these residential properties to an interest in ultimate hospitality services at hotels. That’s one reason for our investment in and refresh of those hotels.
The second reason is we’re a local company and tourism is one of Hawai‘i’s top industries, and it made sense for us to participate more in that important sector and bring in our global sophistication and local sensibilities. We take a lot of pride in knowing we are one of the few remaining locally owned and operating multiproperty hoteliers.
Q: That’s true, you are. Do you feel intimidated competing against much larger companies with huge hotel investments in Hawai’i?
Porter: We don’t think of it that way. We look at each opportunity to see if it makes sense for us to invest. We have Lotus Honolulu, this beautifully located property right between Diamond Head and the Pacific Ocean; we have Hotel Renew, half a block from the beach, looking out to the Pacific Ocean; and then Waikiki Malia in the heart of Waikīkī on Royal Hawaiian Avenue. Each of those were compelling enough opportunities to make us feel confident that they were good investments, and we could add something to them through our management.
The synergy between ownership and operation is wonderful, and we have a very long-term investment horizon. We are family owned. We have no mandate to sell in any period of time and that allows us to invest in the properties and people in ways that we see playing out well for us and our community for a long time.
Q: You also consult on hotel projects, including the Hilton Garden Inn in Waikīkī and the Hyatt Regency Waikiki streetscape. That streetscape is described as 150,000 square feet of retail with 60 tenants, almost three football fields. How did you acquire the retail expertise to do that?
Porter: Over the course of Duncan’s nearly 50 years of developing and investing in Hawai‘i, we’ve built expertise across multiple sectors. Retail was the staple of the early years and he’s been involved in building many retail centers.
We developed and currently have ownership and management of Kapolei Commons, Moanalua Shopping Center and Stadium Marketplace on O‘ahu, and Kona Commons on the Big Island, and also the Hokua commercial podium. (All on leased land.)
We were the first licensee of Starbucks and partnered with Starbucks corporate to bring that to the Islands, built out over 60 stores, operated those stores. Jamba Juice, Blockbuster, P.F. Chang’s. So for decades, MacNaughton has had experience in the retail sector, also leasing, landlord side, tenant side, tenant rep, all of this, and then also building shopping centers around core tenants that we think are really important to have in Hawai‘i.
A lot of these hotels and some condominiums have mixed use – retail on the streetscape, etc. – so it was a natural fit for us to be able to bring the retail expertise together with our knowledge of development, residential, hospitality and also our local sensibilities. A lot of these larger companies aren’t as deeply rooted in Hawai‘i as we are, so we can bring all this expertise together and bring it to bear on a project.
We have a culture that fosters innovation and creativity. We have talented people, but at the same time, we are constantly challenging one another to figure out: Is that the best way or is there something we’re not hearing?
We listen to the market. Understanding the community is important, and this changes over time. So as the world changes, as the community changes, we always want to stay ahead of the curve.
I think that expertise and approach makes us attractive to consult with. We don’t consult on every project that people ask us for; we need to feel there’s synergy, and it’s going to be either a special thing for the community or will result in a further opportunity for us to do something special in the future.
Q: Tell us about other important properties that MacNaughton developed but doesn’t own.
Porter: We have had involvement in Kukui Marketplace in Līhuʻe, Maui Marketplace in Kahului and Waikele Center. We also had a hand in Kapahulu Market, Kukui Grove Center (Līhuʻe), and Kailua Village shops and Henry Street Shops (Kona).
Q: In a different vein, Hawai’i Pacific Health hired you to manage the $20 million-plus renovation and expansion of Kapi’olani Medical Center for Women & Children.
Porter: We weren’t the builders but were approached by the senior leadership at HPH to help consult on the project. They’re wonderful health care providers, but development or renovation is not their core expertise. We have close relationships throughout the community and are, I think, a trusted partner to give expert guidance, honest answers to problems, and innovative and creative solutions.
I don’t know all the details, but I know the parking structure in particular was quite the puzzle that we helped them to figure out how to build. That was a wonderful partnership and something we thought was important to our community.
Q: Thank goodness for the new parking structure, because my daughter was born there and a patient afterward, and I remember the old structure and the many times when we either got the last parking spot on the roof or had to wait for one.
Porter: I’ve been there many times too. Folks with expertise in one area have trusted our guidance in other areas. That’s also how we worked with General Growth Partners, later Brookfield Properties. Duncan and Ian MacNaughton convinced their CEO to develop residential on the old Sears parking lot at Ala Moana Center once it became available. General Growth Properties was clearly a retail expert, and we had other expertise, including development design.
Q: And you opened a restaurant.
Porter: Yes, last October, a phenomenal restaurant in the Lotus Hotel on the second floor called Arden Waikiki. It is spearheaded by chef Makoto Ono and his wife, Amanda Cheng, who’s a pastry chef, and their menu celebrates innovative culinary techniques and locally sourced ingredients.
Our chefs are passionate about partnering with local farmers and purveyors and creating exceptional dishes. We also have live music on Sundays with local artists, and we’re bringing that space to life overlooking Kapi‘olani Park.
Q: How have your properties been affected by the pandemic, the shift to remote work and the growth of online retail – factors that have disrupted commercial real estate worldwide?
Porter: One thread throughout all of those is our emphasis on relationships. Relationships have always mattered to us, and during the pandemic, they mattered through remote work. They mattered with our employees and with the growth of online retail, they mattered with our customers and tenants.
For our customers, we brought in a lot more local restaurants and tenants to fill our properties, especially Kapolei Commons. Through all these experiences – pandemic, remote work, online retail – it’s those connections with people that really matter to us and we leaned into it, and that helps everyone through it.
Q: 2025 is your company’s 50th anniversary. What’s your vision for the future?
Porter: Duncan is still chairman, though day to day, the company is now led by his middle son, Ian MacNaughton, who serves as our CEO. When we think about the future of MacNaughton, obviously Duncan’s mark and oversight is still apparent, and he and Ian are close and talk about the business a lot. The current vision is with Duncan’s guidance and blessing, but it’s really something Ian is carrying forward with his team, including myself.
I thought you would ask me about this, so I asked Ian about that and he said we’re going to be persevering as an enduring real estate development and investment company based in Hawai‘i, serving the needs of Hawai‘i and bringing innovative solutions and experiences to enhance our community.
From a business standpoint, we’re going to continue to diversify our portfolio in terms of activities as well as geographic holdings, and we’ll continue to seek synergistic partners that share our vision and values on a project-by-project basis.
Speaking with Duncan this morning in the office, we both feel strongly about continuing to serve as a responsible, reliable development and investment partner in Hawai‘i for Hawai‘i.
(The day after my interview with Porter, Ian MacNaughton followed up with an email. “Over the past five decades, our company has grown and evolved, but our core values of integrity, innovation, collaboration and community commitment have remained steadfast,” he wrote. “We owe our success to the dedication of our team and the trust of our partners and clients. As we look to the future, we remain committed to honoring our heritage while embracing new opportunities to serve Hawai‘i with the spirit of aloha that defines us.”)
Q: What is the company’s culture?
Porter: When I joined the company, I led a strategic planning session and met with different people in the company, some of whom had been there for decades and some newer. What was remarkable is that the way the longer-term employees and newer employees described the company was almost identical, and we distilled it all down to innovation, integrity, collaboration, community and balance. That’s how Duncan built the company. That’s how Ian has been perpetuating the company.
Q: The fifth value you listed was balance. What balance are you talking about?
Porter: Balance as applied to many situations. Work-life balance is a part of it. We work hard, we play hard, we make sure that families and health always come first. But we also want to do excellent work. So that’s a part of it.
Also balance in understanding what’s going on in the broader world, making sure we are still driven by the needs, sensibilities and values of our community in Hawai‘i. We try to take things into account and come up with something that’s special and right for the project where it’s situated, the place, everything.
We partner a lot with local nonprofits, either because our employees or our partners are involved, or because those organizations work in areas where we have real estate developments or investments and we want to support the community there, or because these organizations support the health of Hawai‘i’s people and economy.
We started the MacNaughton Foundation several years ago and we meet several times a year to discuss what else we can do to support our community. I personally take a lot of pride in that.