Pacific Office Properties Trust has found a partner to acquire partial ownership in two troubled office building investments, including the Pacific Business News Building in Waikiki.
The publicly owned company with a portfolio of office buildings largely concentrated in Honolulu announced yesterday that it has formed two joint ventures with investment firm Angelo, Gordon & Co. to own the PBN Building and a three-tower office complex in Phoenix called City Square.
The two properties were tied to $64.4 million in overdue mortgage debt as of the end of last year.
That delinquent debt has been paid off in connection with the joint-venture deal, and has alleviated penalty fees that were being incurred by Pacific Office.
"The contributions of City Square and the PBN Building to these joint-venture structures are highly beneficial to both partners," Jim Ingebritsen, Pacific Office president and chief executive officer, said in a statement.
Financial terms of the partnership were not disclosed.
Ingebritsen said partnering with New York-based Angelo Gordon is consistent with Pacific Office’s strategy to own some properties in partnership with institutional investors.
Including the two new additions, Pacific Office owns 18 office properties, mostly in California, with joint-venture partners. The company wholly owns six properties, including five in Honolulu.
Pacific Office, however, announced in March that it was seeking joint-venture partners or buyers for all its wholly owned Honolulu buildings as a way to recapitalize the company, make building improvements and expand.
Finding investment partners for the buildings would provide needed capital for the San Diego-based firm founded by local commercial real estate investor Jay Shidler and allow it to remain the largest owner of office buildings in Honolulu.
The five wholly owned buildings are Waterfront Plaza, Davies Pacific Center, Pan Am Building, First Insurance Center and Clifford Center.
"We’re talking to a number of different groups as potential joint-venture partners," said Larry Taff, executive vice president of Hawaii operations for Pacific Office.