SKB bought the two office buildings subject to a long-termground lease and acquired the parking garage on a fee-simple basis.The complex, which was developed in the 1980s, was 95% leased atthe time of the sale.

SKB says that the high level of leasing reflects thefundamentals of the Kapiolani Corridor submarket, near the centralbusiness district of Honolulu, where the tenant roster includes amix of finance, insurance, healthcare, engineering firms andgovernment entities. More than 50% of the rentable space is leasedby investment grade tenants, including Geico, ADP, ProgressiveInsurance, ING North America and Kaiser Foundation Health.

Rents have been rising in the submarket because of its lowvacancy, but the rates are generally not enough to justify newconstruction, says SKB Chairman Bob Scanlan. This means "it'sunlikely that an abundance of new office product will come onlineduring the holding period," Scanlan says.