One-time charges including a goodwill reduction severely dragged down the fourth-quarter financial performance of Pacific Office Properties Trust Inc., the large office-building owner with much of its portfolio in Hono­lulu.

The publicly traded real estate investment trust based in San Diego reported negative $54.9 million in "funds from operations" during the quarter.

Funds from operations is a measure that doesn’t account for property depreciation and such things as tenant allowances and gains or losses from property sales. The measure is a rough equivalent to operating income and is regarded by the REIT industry as a better reflection of the health of such companies that reap special tax benefits.

Pacific Office said its funds from operations excluding nonrecurring expenses was a positive $500,000.

The biggest one-time expense was a noncash impairment of $40.3 million tied to good will, representing some of the artificial value the company had been carrying in excess of the value of its real estate assets to comply with accounting rules.

"It has nothing to do with writing down the value of buildings," said Larry Taff, executive vice president of Hawaii operations for Pacific Office. "Is something terrible happening? Well, not really."

Other one-time expenses during the quarter included $7.2 million related to the company’s inability to complete a purchase of 12 office properties in California for $306 million.

The purchase was to have been financed by stock sold by Pacific Office, but the offering was withdrawn. The cancellation of the stock offering and a separate stock offering resulted in an expense of $6.7 million during the quarter.

Similar expenses didn’t occur in the 2009 fourth quarter, but an extraordinary expense in the year-ago quarter related to stock redemption features resulted in a negative $57.6 million in funds from operations.

Pacific Office, which was established in 2008 by local commercial real estate investor and University of Hawaii graduate Jay Shidler, faced an untimely start as it has had to struggle with financial and real estate market downturns. To date, the company has been unable to achieve positive cash flow.

In a new attempt to raise capital to help finance operations and expand, Pacific Office has turned to seeking investment partners or buyers for its six Hono­lulu office buildings that represent the bulk of the company’s assets.

Pacific Office announced earlier this week that it has retained a broker to market the buildings from downtown to Waikiki: Waterfront Plaza, Davies Pacific Center, Pan Am Building, First Insurance Center, Pacific Business News Building and Clifford Center.

Taff said the lack of positive cash flow largely has to do with investments in properties the company owns, including renovations and improvements for tenants that are expected to produce long-term benefits.

"We’re improving the properties and making investments," he said. "We think we’ve seen the worst of the downturn."

Shares of lightly traded Pacific Office last closed at $2.17 on Thursday.

No shares traded yesterday.