Hawaii’s Largest Office Property to Trade in $232M Deal
- Jun 30, 2010
June 30, 2010
By Barbra Murray, Contributing Editor
Bishop Square, which with 960,000 square feet of office space holds the title of the largest office property in Hawaii, is about to change hands. Santa Monica, Calif.-based Douglas Emmett Inc. has signed an agreement to acquire the premier complex for $232 million from Bishop Square Associates, a partnership involving Sacramento, Calif.-headquartered California Public Employees’ Retirement System (CalPERS) and Milwaukee-based Northwestern Mutual.
Carrying the address of 1003 Bishop St., Bishop Square sits on nearly three acres in the middle of Honolulu’s central business district. The property consists of two Class A office buildings with ground-level retail and an above ground parking facility. The two high-rise structures, the 30-story Savings Bank Tower and the 28-story Pauahi Tower, were developed in 1972 and 1983, respectively, and are linked by a one-acre park that serves as a popular downtown meeting spot.
Currently, Bishop Square is 91 percent leased to a roster of approximately 200 tenants. The property’s office occupancy level of 91 percent is a testament to its status; the average vacancy rate for Metropolitan Honolulu, as well as the downtown submarket, is 11.4 percent, according to a first quarter report by real estate services firm CBRE Richard Ellis.
Douglas Emmett, which has been eyeing Bishop Square since it entered the Honolulu market in 2004, will rely on cash and funds from its revolving credit facility to finance the acquisition. The REIT plans to secure term mortgage financing on the property later, while interest rates are still reasonable, for the purchase and for the refinancing of its loans that are scheduled to mature in 2012.
New York City-based Eastdil Secured marketed Bishop Square on behalf of CalPERS and Northwestern Mutual. Had they sold Bishop Square in, say, 2007, they would certainly have gotten far more than the $242 per-square-foot they will get from Douglas Emmett. However, they will still walk away with a substantial amount of pocket change, as the partners acquired the property in 1989 for just over $160.6 million.