Amfac Center deal nears completion

Advertiser Staff and News Services

John Anderson, founder of Kayne Anderson Investment Management and the man the University of California at Los Angeles named its graduate business school after, is scheduled to complete the purchase of the 470,000-square-foot Amfac Center in downtown Honolulu for $95 million on Nov. 1.

The purchase of the twin, 20-story complex from MFD 700 Bishop Inc., a subsidiary of Mitsui Fudosan Co., comes with travel to Hawai'i down after the Sept. 11 terrorist attacks and a slowing Japanese economy. Even so, Anderson said he is attracted to the market because there has been no new office construction in six years and Honolulu's vacancy rate has been dropping, in contrast to other U.S. cities.

"It's good real estate, well located and I'm getting in at a reasonably fair price," said Anderson, who lives in Bel Air, Calif. "Do you want to buy at the top of the market or when the market's a little soft? The market's a little soft primarily because the Japanese are not coming."

Anderson, 84, whose net worth is listed by Forbes magazine at $750 million, started Ace Beverage Co. before diversifying into investment advice, banks, real estate and insurance. He owns 42 companies, including Paradise Beverages, the largest distributor in Hawai'i. Last year, through Paradise Beverages, Anderson acquired Lion Coffee and Superior Coffee & Foods Hawaii.

Built in the early 1970s, Amfac Center is nearly 100 percent leased and tenants include GE Capital, Amfac Land Co. and Charles Schwab Corp. Anderson topped more than 10 other bidders, including real estate funds, pension funds and Asian companies, said Steve McKenzie, managing director at Eastdil Realty, which advised Mitsui on the sale.

The vacancy rate in Honolulu's 5.4 million-square-foot central business district stood at 11.9 percent in the third quarter, down from 12.2 percent a year ago and 18.8 percent five years ago, said Kalani Schrader, vice president at CB Richard Ellis Services Inc.

Rents, still 27 percent below their peak levels of the 1980s, are expected to rise 10.8 percent over the next two years, according to Torto Wheaton, the research unit of CB Richard Ellis, the highest of the 53 markets it ranks.

"The key to our market is there's been no new construction and nothing planned," Schrader said. "I think that's why a lot of investors are looking at our market."