HRPT Closes $480 Million Acquisition of Net Lease Portfolio in Hawaii

NEWTON, Mass., Dec 5, 2003 (BUSINESS WIRE)

HRPT Properties Trust (HRP) today announced that it has acquired the Damon Estate commercial and industrial lands in Oahu, Hawaii for $480 million. As previously announced, the Damon Estate commercial and industrial lands consist of 9,754,828 square feet of land primarily located between Honolulu International Airport and Honolulu Harbor, within a short distance (between 0.5 and 5 miles) from the Honolulu Central Business District. Approximately 99% of the Damon lands are leased to 137 tenants (under 186 separate leases) who have developed various buildings and businesses on their leaseholds.

Because of their location, most of the Damon lands were originally developed for warehouse uses. However, since their historical uses were first developed, many parcels have been redeveloped as shopping centers and other commercial uses. The triple net rents payable by tenants of the Damon lands in 2004 is expected to be approximately $37.5 million/year, which amount includes about $2 million/year of non cash average rents which will be received in the future as a result of contractual rent increases and are reported as income under generally accepted accounting principles, or GAAP. Under the lease terms, the tenants are generally responsible for all land operating costs and liabilities, including environmental liabilities.

The average remaining tenant lease term for the Damon lands is approximately 22.3 years. No leases expire before 2009, when 9 leases for a total of approximately 400,000 square feet will expire. Many of the Damon land leases provide that rents are periodically reset to market rates, usually every 5 to 10 years. HRPT has acquired the Damon lands free and clear of mortgage debts. Some of the land tenants have borrowed money secured by their leasehold interests to develop their leaseholds or operate their businesses, but all of these tenant leasehold mortgages are subordinated to HRPT's land ownership.

HRPT's current business plan for the Damon lands is to work with existing tenants to offer extended lease terms in return for rental adjustments. If acceptable arrangements are not agreed with existing tenants and as leases expire, HRPT then expects to offer the various parcels for lease, sale or redevelopment for their respective highest and best uses.

HRPT has funded this purchase using cash on hand and drawings under its unsecured revolving bank credit facility. HRPT is currently considering various alternatives for re-financing outstanding amounts under its revolving bank credit facility on a long term basis. HRPT Properties Trust is a real estate investment trust headquartered in Newton, Massachusetts, which primarily owns approximately 26 million square feet of office buildings located throughout the USA.

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