Softness in the office leasing market in Hawaii and Southern California continues to hobble Honolulu-based Pacific Office Properties Trust Inc., which recently reported its fourth consecutive annual financial loss.
The company lost $13.9 million last year, which was an improvement from a $21.9 million loss the year before, according to its annual report filed with the Securities and Exchange Commission this month.
Pacific Office, a real estate investment trust formed by local commercial real estate investor Jay Shidler in 2008, has been staying afloat by selling buildings in the last two years, and is continuing sales this year because cash flow from operations hasn’t been enough to cover expenses.
The company said proceeds from its sale of First Insurance Center on Ward Avenue last year plus other cash on hand should be sufficient to cover expenses through this year.
First Insurance Center sold for $70.5 million, which included $52 million in debt assumed by the new owner.
Pacific Office reported having $21.3 million in unrestricted cash and cash equivalents at the end of last year, plus another $3.7 million mainly in restricted reserves for taxes, insurance and leasing.
In February, Pacific Office sold its 17.5 percent interest in Bank of Hawaii Waikiki Center at 2155 Kalakaua Ave. for an undisclosed price.
In April, Pacific Office expects to complete a sale of its wholly owned Clifford Center building downtown for $11.2 million in a deal with Alexander & Baldwin Inc. that would generate $4 million for Pacific Office, the annual report said.
Meanwhile, Pacific Office has wrestled with the performance of some buildings and bad debt.
In January the company lost its 32 percent interest in the Palomar Heights Plaza in Carlsbad, Calif., through a foreclosure sale.
Pacific Office reported having $125 million of debt that was in default at the end of last year. About $2 million was tied to the Palomar building, and $123 million is secured by five Southern California properties that Pacific Office refers to as its SoCal Portfolio.
Overall, Pacific Office owns 17 properties of which four are wholly owned and 13 are joint ventures. All four wholly owned properties are in Honolulu — Clifford Center, Waterfront Plaza, Davies Pacific Center and the Pan Am Building. The company at one time owned 24 office properties.
Shares of Pacific Office stock, which are traded on an over-the-counter exchange, traded at 27 cents on Thursday, which was up from 20 cents on Monday. It did not trade on Tuesday or Wednesday. Pacific Office shares traded as low as 7.5 cents at the end of last year. The annual report was released March 15.
