STAR-BULLETIN FILE / 2003
The Davies Pacific Center, right, includes such businesses as Hopaco, New York Life Insurance Co. and Citizens Communications Co. The deal for Davies and the Pan Am Building closed Dec. 19.
Davies, Pan Am
buildings soldShidler Group pays
$90 million for the
landmark structures
The Shidler Group has purchased two landmark Honolulu buildings for $90 million, more than $8 million below the assessed value of the structures.
"This is The Shidler Group's first large-scale office purchase in Hawaii in nearly 10 years," Shidler partner Matt Root said in a statement.
"Acquiring these trophy properties in the prestigious and convenient central business district represented an unprecedented opportunity to acquire nearly 5 percent of the total Honolulu office market and nearly 10 percent of the 'Class A' central business district market in one transaction.
"This is also an opportunity to acquire institutional-quality office buildings at 50 percent of replacement cost at the bottom of the market cycle, with trends pointing to an imminent economic recovery."
Industry insiders speculated the combined price was broken down to $58 million for Davies and $32 million for the Pan Am Building.
The sale price is staggering considering that the seller, the California State Teachers' Retirement System, paid $145 million for the buildings in 1989.
"It's not as bad as some of the Japanese sales, but they kind of bought at the peak and sold at the trough," said Jamie Brown, president of Hawaii Commercial Real Estate LLC. His company and mainland-based Secured Capital Corp. represented both sides of the transaction.
The California State Teachers' Retirement System has been refocusing its investment portfolio, hence the sale.
"They wanted low-risk major metropolitan areas. We were considered medium risk, tier two," he said.
It took nearly three years to sell the buildings.
"We went to market with it in early 2001, and when they went to market with it, office buildings were the hot product type," Brown said. "And then following Sept. 11, it went from the top of investors' lists to the bottom of investors' lists."
"This is going to be an awesome investment (for Shidler)," Brown added. "I think they're going to do great with both of these buildings."
As of the Dec. 19 closing date, Shidler took over management of its new acquisitions from Chicago-based Jones Lang LaSalle Americas Inc. and kept most of the five employees.
Former property manager Kirk Horiuchi has taken a position as senior asset manager with Kamehameha Schools. Shidler hired former Pan Am building manager Angela Hodge and moved her to Davies Pacific Center. It also hired Anna Palla away from Colliers Monroe Friedlander to manage the Pan Am Building.
Colliers will continue to handle the leasing "during the transition," Palla said.
Both buildings contain a mix of offices and retail shops.
Built in 1972, the 22-story, 346,619-square-foot Davies Pacific Center is at 841 Bishop St., where it occupies the entire block. Its tenants include Hopaco, New York Life Insurance Co. and Citizens Communications Co. It is 87 percent occupied.
The Pan Am Building's 203,910 square feet are divided among 17 floors and it is 91 percent occupied. It was built in 1969.
Its tenants include American Savings Bank, the state Department of Accounting and General Service, and Gold Crown Jewelers.
While commonly referred to as the Pan Am building, original lease documents refer to it as the American Savings Building. "They were one of the original tenants," Horiuchi said. His involvement with the buildings dates back to 1993 when he was employed as an asset manager with Equitable Real Estate. It became known as the Pan Am building because of the former airline-tenant's huge, illuminated blue sign on the building.
Shidler recently purchased Bay View Golf Park, The Shops at 2150 Kalakaua Ave. and the Waikiki Galleria.
Its recent office building acquisitions on the mainland include the $35 million Washington Mutual Tower and the $62.5 million Seaview Corporate Center in San Diego.
