Shidler Group going public through merger

Six office properties in Honolulu are included in the deal with AZL

The Shidler Group signed an agreement yesterday to go public through a merger with Phoenix-based real estate investment trust Arizona Land Income Corp.

Arizona Land, which is listed on the American Stock Exchange as AZL, has agreed to acquire the West Coast assets of the Shidler Group.

Included in the deal are 10 Class A office properties, six of which are in Honolulu, which would go into an umbrella partnership formed by AZL.

The Davies Pacific Center and City Center downtown, Waterfront Plaza in Kakaako, the Pan Am Building on Kapiolani Boulevard, First Insurance Building on Ward Avenue, and the Pacific Business News Building in Waikiki are part of the package.

The other office properties are in San Diego and Phoenix.

The two companies will reincorporate in Maryland under the name Pacific Office Properties Trust Inc. Pending shareholder approval, the deal is expected to close in January.

"We're forming a limited partnership, and contributing all our properties to the limited partnership," said Larry Taff, managing partner of the Shidler Group. "It's an alternative way of taking our portfolio public."

The Shidler Group will continue to control the combined entity from its Honolulu headquarters, according to Taff. The two companies together will have assets worth about $570 million.

Jay H. Shidler will be chairman of the board and interim chief executive officer. He recently donated $25 million to his alma mater, the University of Hawaii College of Business Administration. The school was renamed the Shidler College of Business.

Pacific Office would become the fourth public company founded by Shidler and his team.

AZL has been externally managed by ALI Advisors Inc., a group in Phoenix.

"We are extremely pleased to enter into this important transaction with the Shidler Group," said Thomas Hislop, CEO and Chairman of AZL. "We believe that this transaction is in the best interests of our shareholders, and is superior to the various other strategic opportunities that we have considered over the past several years."

AZL was formed in 1988 and its real estate portfolio is worth about $7 million.

The Shidler Group, founded in 1972, has over the years acquired, owned and managed more than 150 million square feet of leasable space.

In anticipation of going public, the group formed Pacific Office Properties Trust LLC last fall to manage Class-A office properties in Honolulu, San Diego, Los Angeles and Phoenix.

The transaction has been approved by Arizona Land's board of directors, but is subject to approval by its shareholders.