550,000-SF Island Office Portfolio Trades Hands

HONOLULU-The California State Teachers’ Retirement System has sold a 550,000-sf CBD office portfolio here for $55 million less than it cost to acquire the portfolio at the end of the 1980s.

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.”