Hawai'i's largest local owner of Honolulu office buildings said it expects to sell shares of its real-estate portfolio to the public, allowing individuals to own a stake in commercial property throughout O'ahu's central business district.

The Shidler Group said selling shares in its portfolio, which also includes office buildings in Phoenix, San Diego and Los Angeles, could raise $1 billion for the private company founded and led by University of Hawai'i graduate Jay Shidler.

The Honolulu buildings in the portfolio would likely include Davies Pacific Center and City Center downtown, Waterfront Plaza in Kaka'ako and the Pan Am Building on Kapi'olani Boulevard.

Another property, the First Insurance Building at 1100 Ward Ave., is being acquired by Shidler Group in a deal expected to close next month, and would be added to the portfolio.

Shidler Group has been building up its Hawai'i commercial property holdings in the past few years in anticipation that rising rents, growing demand for space and no near-term construction of large office buildings would make the acquisitions more valuable and attractive to investors.

"We're counting on Honolulu to become a hot market," Shidler said. "We're kind of looking at a scarcity of office space in the next two years."

Rents, though rising, would have to about double in the next three years to justify the cost of building a new office high-rise, according to Shidler, who doesn't forecast rents rising that much.

Shidler Group formed the private company, Pacific Office Properties Trust LLC, last month to hold about 4 million square feet of office real estate, including roughly 1.5 million square feet of O'ahu office space equivalent to nearly 10 percent of the market.

Shidler said the plan is to offer shares in Pacific Office on the New York Stock Exchange as a real estate investment trust, or REIT. A public offering is not certain, but is expected in about 18 months if the company follows through with the plan.

If Pacific Office goes public, it would be the fourth public company formed by Shidler and his team.

Other publicly traded REITs initiated by Shidler Group principals are Corporate Office Properties Trust, which primarily owns office buildings in the Baltimore, Md.-Washington, D.C., area, and First Industrial Realty Trust, which owns warehouse and light-industrial real estate outside Hawai'i. Shidler is chairman of both companies. A third Shidler REIT, Trinet Corporate Realty Trust, was acquired by another company.

REITs are public companies that must predominantly invest in commercial real estate. They generally don't pay income tax on net income distributed to shareholders.

Other publicly owned companies own significant Hawai'i real estate, such as Alexander & Baldwin Inc. and Maui Land & Pineapple Co.

A few Mainland REITs also own Hawai'i real estate, most notably Chicago-based General Growth Properties, which owns Ala Moana Center and Victoria Ward Centers.

Shidler said the goal for Pacific Office if it goes public is to then increase its portfolio by as much as double with acquisitions over 18 months or so.

The Shidler Group, established in 1972, would retain about 4 million square feet of generally lower-quality or nonoffice commercial property in Hawai'i, Texas, Arizona and California.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.