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HOUSTON-After more than a year of negotiation, Crescent Real Estate Equities Co. and its largest office tenant, El Paso Corp., have come to an agreement to terminate a lease for 888,000 sf of office space in Greenway Plaza. The pact calls for El Paso to pay $65 million in termination fees and $62 million in rent obligations.

The agreement allows El Paso to terminate its leases on Dec. 31, 2007, and move all operations into its headquarters building at 1001 Louisiana St. in Downtown. The oil and gas firm inherited the Greenway Plaza space four years ago when it took over Coastal Corp.

As GlobeSt.com previously reported, El Paso leases 21% of the 4.3-million-sf Greenway Plaza complex. It leases space in 4 Greenway Plaza, 5 Greenway Plaza, 8 Greenway Plaza and 9 Greenway Plaza. Once El Paso moves out of the complex, it will be less than 70% occupied. For previous story, click here.

The REIT previously said about 70% of El Paso’s multiple leases expire in 2014, but some come due in 2010 and 2011. Crescent will immediately begin seeking new tenants for the El Paso space, according to a company statement. The REIT says it can collect rent for the vacant space from both El Paso and a new tenant if the space is re-leased before 2007. Crescent did not return phone calls by publication time.

As a result of the agreement, Crescent bumped its earnings guidance to $1 per share to $1.10 per share for 2005. According to the REIT, it will absorb $62 million in rental income from El Paso and collect $8.4 million of income this year and $16.8 million per year in 2006 and 2007.

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