Pacific Office Properties Trust Inc. has agreed to sell its interest in Bank of Hawaii Waikiki Center, part of an effort to offset financial losses stressing the 4-year-old company, which owns a collection of office buildings in Honolulu and on the mainland.
The Honolulu-based firm disclosed the agreement to sell the nine-story building at 2155 Kalakaua Ave. to an undisclosed buyer in a financial report filed Friday with the Securities and Exchange Commission.
The company also reported a third-quarter loss of $3.7 million, which was an improvement from a $6 million loss during the same quarter that ended Sept. 30 last year.
Pacific Office was established by Hawaii commercial real estate investor Jay Shidler in 2008 as a public company with greater access to capital that could be used to expand a portfolio of office buildings Shidler contributed to the venture.
But for nearly the last two years the company has instead pursued a strategy of selling assets to generate income amid an office-leasing market still struggling to recover from effects of the economic downturn.
During the second quarter, Pacific Office sold First Insurance Center on Ward Avenue for $70.5 million, which helped produce a $1.6 million profit that compared with an $11.5 million net loss in the 2011 second quarter.
During the third quarter, Pacific Office’s portfolio shrank by one building when a Phoenix building, Black Canyon Corporate Center, was sold in foreclosure. Pacific Office owned the property with a partner, and the sale produced a $141,000 gain for Pacific Office.
Pacific Office’s portfolio now comprises four wholly owned buildings in Honolulu — Waterfront Plaza, Davies Pacific Center, the Pan Am Building and Clifford Center — and partial stakes in 15 properties in California, Arizona and Hawaii.
Pacific Office owns a 17.5 percent stake in the Bank of Hawaii Waikiki Center, which it bought with a partner in 2008 for $30 million.
The company noted in its latest financial report that it may seek to sell some or all of its wholly owned assets in the near or longer term. The company also said it is taking steps to reduce discretionary operating costs while still maintaining building quality and management services.
Pacific Office said it continues to face challenging conditions that include depressed rental rates and occupancy in Honolulu.
"Competition to attract and retain high credit-quality tenants remains intense," the company said in its financial report.
About 77 percent of Pacific Office’s portfolio of office space was leased as of Sept. 30. The rate was 84 percent for its Honolulu properties.
