Morgan Stanley buys isle buildings
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Morgan Stanley, which has been seeking to grow its Hawaii portfolio, has acquired four Oahu office buildings for $98 million.
Arroyo Realty Partners of Los Angeles sold its 373,227-square-foot portfolio which includes the Hawaii Agricultural Research Center, the Airport Center adjacent to the Honolulu International Airport and the Ocean View Court, which includes the Ocean View Center and Haseko Center in downtown Honolulu.
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A Los Angeles real estate investment firm has sold four Oahu office buildings to Morgan Stanley for $98 million.
The sale of Arroyo Realty Partners Hawaii portfolio includes the Hawaii Agricultural Research Center, the Airport Center adjacent to the Honolulu International Airport and the Ocean View Court, which includes the Ocean View Center and Haseko Center in downtown Honolulu. The buildings combined total 373,227 square feet with occupancy rates at or above 90 percent. They have more than 100 tenants.
The sale follows the growing trend in real estate activity in Hawaii by large mainland institutional firms seeking to invest in the islands after years of redlining the state for markets such as Southern California, Seattle and San Francisco.
"When we purchased the assets, many of the institutional players had not yet entered Hawaii," said Chuck Bruni, managing principal of Arroyo Realty, in a statement released by Buchanan Street Partners, the national real estate investment bank which brokered the sale. "The Honolulu office market has now reached a new plateau with most of the A-tier office properties being held by recognized institutional investors."
Representatives from Morgan Stanley couldn't be reached for comment.
Arroyo Realty acquired the 110,983-square-foot Airport Center in Honolulu from eRealty Cos. in late 2004 for nearly $23 million, and the Ocean View Center and Haseko Center, measuring 186,430 square feet combined, for about $25.5 million in 2005 from Alexander & Baldwin Inc. The company bought the 75,814-square-foot Hawaii Agricultural Research Center -- also known as the Robert L. Cushing Building in Aiea Heights -- last year for $20.6 million.
"This portfolio included a stabilized and diversified tenant roster and represented the opportunity to obtain quality assets well below the replacement cost," said Ryan Smith, Buchanan Street Partners' senior vice president.
Arroyo Realty has spent millions of dollars renovating the buildings over the past few years, according to sources familiar with the transaction, who said the company is looking to acquire multiple office and retail properties in Honolulu.
Arroyo Realty, which focuses on acquiring and repositioning commercial real estate, also is developing a retail project, known as Manana Village Center, on 6.65 acres in Pearl City through its affiliate, Arroyo Pacific Partners.
The acquisition immediately turns Morgan Stanley into a major player within the Honolulu office market, which has the third-lowest vacancy rate in the nation at 6.85 percent, according to Buchanan Street Partners.