In a transaction that closed shortly before the end of the year, CalSTRS sold the 22-story Davies Pacific Center and the 17-story Pan Am Building to the Shidler Group for $90 million. CalSTRS acquired the two properties in 1989 for $145 million and proceeded to invest significant capital in the properties.

It is the first large scale office purchase in Hawaii for the locally based Shidler Group in nearly a decade. Company partner Matt Root says the acquisition was "an unprecedented opportunity to acquire nearly 5% of the total Honolulu office market and nearly 10% of the CBD class A market in one transaction." Root adds that the purchase was made at "the bottom of the market cycle" and at "50% of replacement cost" at a time when he believes an economic recovery is "imminent."

In backing up his belief in an imminent recovery, Root listed the following information: Moody's Investors Service recently selected Hawaii as the best commercial real estate market in the US; the Honolulu office vacancy rate, at 13.8%, is below the national average and likely to improve; Hawaii's Gross State Product has increased by an average of 3.5% per year for the past three years compared to an average 1% increase nationally; Hawaii's unemployment rate of 4.4% is the lowest in the nation, and; increased federal defense spending is beginning to be felt at the local level in Honolulu.