An offer by the Office of Hawaiian Affairs to purchase Moanalua Gardens has been rejected by its landowner, the Estate of Samuel Mills Damon.

Timothy Johns, the estate's chief operating officer, said the trust rejected OHA's offer this week and is pursuing discussions with another party.

Johns would not disclose the name of the potential purchaser but said the offer was "more favorable in terms of price and conditions."

OHA Trustee Os Stender, one of those who pushed for OHA to make the purchase, said that the potential buyer is one of the beneficiaries of the Damon estate. "He outbid us, we had conditions, and he had no conditions," Stender said.

In May, OHA trustees agreed to pursue purchase of the 26-acre parcel "for the purpose of economic development opportunities and/or to continue to preserve and enhance the cultural and historical aspects of the property."

They had instructed its staff to offer as much as $5 million for the parcel.

OHA trustees are not disappointed by the development, Stender said, noting that the potential buyer may preserve the gardens, which are known for their cultural and historical value as a botanical garden.

"If his intention is to keep it the way it is, that's fine because that's one of our objectives," Stender said.

The potential buyer has 60 days to complete due diligence on the transaction.

OHA Administrator Clyde Namu'o said the estate asked that the agency put together a back-up offer. The board has not yet decided whether to do so, he said.

Moanalua Gardens was once owned by King Kamehameha V and is home to several historically significant buildings. It has an assessed value of $5.5 million.

Separately, the Trust for Public Lands and the state Department of Land and Natural Resources has agreed to purchase the back of Moanalua Valley from the estate.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com.