2 Honolulu office high-rises changing hands for $90M
By Andrew Gomes
Advertiser Staff Writer
Investment firm The Shidler Group has signed a contract to buy two Honolulu office high-rises from the California State Teachers' Retirement System for an estimated $90 million.
The sale of Davies Pacific Center at 841 Bishop St. in downtown Honolulu and the Pan Am Building at 1600 Kapi'olani Blvd. is expected to close by the end of the year, according to Shidler Group managing partner Larry Taff.
If completed as expected, the deal would be the largest local office real estate transaction in more than a year, contributing to the growing investment portfolio of the Shidler Group and marking a Hawai'i real estate investment exit by the $100 billion CalSTRS pension fund.
CalSTRS, which administers benefits for more than 715,000 California public school educators and their families, bought the two Honolulu buildings in 1989 for a combined $145 million — $102 million for Davies and $43 million for Pan Am, according to CalSTRS.
The buildings are valued by the city for tax-assessment purposes at $98.3 million — $62.4 million for Davies and $35.9 million for Pan Am.
Taff said his firm's plan is to hold on to the properties in expectation of a market-driven rise in office rents over the next few years.
"I think we're in a good position to enjoy the income in (rising) rents over time," he said. "We see both of these as long-term holds."
Occupancy of the 22-story Davies building built in 1972 is in the high 80 percent range, or about the downtown average, while the 17-story Pan Am building built in 1969 has occupancy in the low 90 percent range, or several percentage points better than the area average.
The next largest Honolulu office building purchase this year was made by Alexander & Baldwin Inc. in March when it bought the property known as 1100 Alakea for $20 million.
Shidler Group, which has offices in Honolulu but is headquartered in San Diego, owns several commercial properties on O'ahu, including Eaton Square, the Waikiki Market Place and the Pacific Business News Building.
Last month the firm partnered to buy the run-down Bayview Golf Course in Kane'ohe for about $4 million, followed by the purchase with partners of 11,000 square feet of retail space along Kalakaua Avenue in Waikiki for $10.6 million. In 2001, the company partnered to buy the Nicos building, a Waikiki retail and office complex housing the DFS Galleria, for $95 million.
CalSTRS put the Davies and Pan Am buildings on the market in 2001 and was represented by Secured Capital Corp. of Los Angeles and co-broker Jamie Brown of Hawaii Commercial Real Estate LLC.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
