Hawai‘i Pacific University charts successful first sale of special purpose revenue bonds

July 26, 2013

HONOLULU – Hawai‘i Pacific University conducted a highly successful sale of all the securities in the first $42 million issue of its special purpose revenue bonds, university leaders announced today.

Investors reacted favorably to plans for overall development of the university, particularly its Aloha Tower Marketplace project, which is a primary target of the bond issue. Demand and pricing for the bonds, and quality of the investors who agreed to purchase were all strong.

“The HPU bonds were quite well received by institutional investors. Some of the best names in the national bond markets made substantial purchases,” said Lee White, executive vice president at George K. Baum & Company, the investment banker for the HPU Series 2013 Bond Issue. “It is a tribute to HPU management that so many prominent investors qualified these bonds for purchase.”

The state Legislature unanimously passed authorization for the bonds last year, and Gov. Neil Abercrombie signed the legislation in July 2012. The university plans to follow this summer’s success with a second sale in 2014.

“These funds are critical elements for the repositioning of HPU within the higher education landscape,” said HPU President Geoffrey Bannister. “As we realign operational budgets to our new strategic priorities, including the Oceanic Institute, we are simultaneously expanding our capital resources to re-imagine the physical campus to meet the needs of a modern, high-touch-high tech university. This transformational movement concerns every aspect of university operations in a concerted, multi-year drive for excellence in operations, research and student service.”

The bond revenue, which is expected to total about $80 million when both tranches are sold, is being invested in classroom, student residences, new learning technologies, cultural venues and research laboratory upgrades at the university’s campuses on O‘ahu.

Plans for the Aloha Tower Marketplace have captured the most public attention. The university will renovate the second floor of the complex, converting existing retail and meeting spaces into urban lofts housing. The development will more than double the university’s student housing capacity and provide valuable new housing resources for mainland and international students who struggle to find affordable dwellings in Honolulu’s rental market.

In addition to the second floor housing, university leaders plan to redevelop the entire complex, bringing new retail partners to the development, relocating some university operations and creating community gathering spaces. The first of the new retail partners was announced last week – Barnes & Noble College, which will open a new 7,200-square-foot bookstore on the first floor in the 2013-14 school year.

The novel public-private partnership behind the bond funding is making all of that progress possible through the efforts of the State, Legislature, the City and HPU.

George K. Baum & Company’s White further noted, “The State did a professional job of assisting HPU in its maiden trip to the capital markets while protecting the State as the conduit issuer of the bonds. The State has absolutely no responsibility for repayment of the bonds, but for legal reasons had to be the issuer of the tax exempt bonds for the benefit of HPU.”

Funds from the bond sale will begin to be available to HPU next month, and renovation at Aloha Tower is expected to commence in the 2013-14 school year, which begins in September.