EOP, JV Seal $281M Deal for 2M SF-Plus in Houston

HOUSTON-Affiliates of Equity Office Properties Trust have sold four suburban Houston office properties, totaling 2.5 million sf, to California-based Thomas Properties Group, Inc. and California State Teachers’ Retirement System. The properties, with a current occupancy ranging from 72% to 92%, sold for $280.5 million or about $111 per sf.

The four properties involved in the transaction were San Felipe Plaza at 5847 San Felipe Blvd., a 45-story, 959,466-sf structure; 2500 City West, a 25-story, 574,216-sf building in Westchase; Brookhollow Central I, II and III, a 797,971-sf complex at the intersection of Loop 610 and US Highway 290 in the northwest submarket; and Intercontinental Center, a nine-story, 194,801-sf building at 15600 JFK Blvd. in the North Belt submarket. The structures were built between 1972 and 1984.

“We made it public last year that we were going to look at 17 growth markets that we were committed to, and exit, over time, the ones where we don’t have as large a concentration,” says Matt Gworek, senior vice president of investments for the Chicago-based EOP. “Houston is a great market, but we decided to focus on markets where we have a better presence and position.”

The all-cash transaction leaves EOP with one property in the Houston market: Northborough Tower at 100 Glenborough Dr. “The return characteristics were a little different for us with that one,” Gworek tells GlobeSt.com. One of those dynamics, he continues, includes a long-term lease to a tenant occupying 80% of the property. “We may continue to look for an exit on that one,” he adds, “but right now, we’ll continue to hold it.”

The offering of the properties generated a great deal of interest and multiple offers both for the entire package and the single properties, Gworek says. The TPG/CalSTRS LLC offer was attractive because it was, in his words, “competitive.”

“They also gave us the option of doing one transaction with one buyer, rather than multiple transactions with different buyers,” Gworek says. “Also, we’d done business with them before and we’re comfortable with them.”