The 22-year-old building at 5400 Westheimer Court is leased for the next 15 years to Duke Energy Gas Transmission LP, an affiliate of Duke Capital Corp., a wholly owned subsidiary of Charlotte, NC-based Duke Energy.

Stephen Olsen, managing director of Global Net Lease Partners, tells GlobeSt.com that the deal began to emerge in mid-November 2002 when Duke put the property on the market. Olsen, who works in the New York City office, says there were a number of competitors for the property. Global Net Lease Partners got the nod in February to jumpstart the negotiations for the one-time regional headquarters for the Bechtel Group Inc. of San Francisco.

In a press release, Stephen De May, Duke Capital's vice president of finance, said the sale/leaseback made sense for the energy supplier because it "allows the company to redirect its financial resources without reducing its commitment to the building and Duke's long-standing presence in the Galleria area." Duke's focus, he added, is on "positive net cash generation."

Olsen said the nine-story building was particularly attractive due to the more than $20 million in upgrades that Duke made two years ago. The tenant's good credit and plan to bring all Houston offices under the regional headquarters' roof further cemented the deal.In recent years, Duke has sold about $1.1 billion of non-core assets, with continuing sales in the near future poised to push the total to $1.5 billion. The "progressive management" strategy, Olsen adds, impressed the fund managers. He says Duke has used the proceeds to clean up the balance sheet and pay down debt, which in turn garnered confidence of analysts and investors.

Olsen says Global Net Lease Partners plans to spend more than $300 million this year for sale/leaseback investment. "This transaction is typical of the type of deal we expect to see more of as major corporations seek ways to monetize their real estate assets by working with experienced real estate and financial partners," he said in the release.