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ATLANTA-In a musical chairs-like scenario, Chicago-based Equity Office Properties Inc., exiting the Atlanta office market, has contracted to buy Cousins Properties Inc.’s 531,000-sf, 81%-leased Frost Bank Tower in Austin, TX for $188 million. The deal for the 33-story tower equals $354 per sf, believed to be a record in the Texas city’s office market. GlobeSt.com first reported in May a deal was possible.

At the same time, Atlanta-based Cousins has contracted to buy Equity’s 1.2-million-sf, 20%-occupied 191 Peachtree Tower in Downtown Atlanta for $153 million. The deal for 50-story property equals $127 per sf. Atlanta construction sources tell GlobeSt.com current average hard costs for the erection of class A towers is $200 per sf, making the 191 Peachtree Tower sale far below replacement cost.

Both deals are expected to close simultaneously in September, according to Cousins president and CEO Tom Bell. The deals follow the pending closing of the 1.25-million-sf, 100%-leased Bank of America Plaza tower July sale Downtown to an affiliate of Los Angeles-based BentleyForbes, as GlobeSt.com previously reported. That transaction, valued at $436 million or $348 per sf, would be the highest per-sf price recorded for a class A office property in metro Atlanta, according to GlobeSt.com research.

The existing record per-sf price is $342.78 per sf which Cousins and an affiliate of Maryland-based Stonebridge Associates achieved in 2004 with the $145-million sale of the six-year-old, 423,000-sf Pinnacle building in the Buckhead submarket to New York-based TIAA-CREF. CSC Associates, an affiliate of Prudential Insurance Co. of America, owns 10% of the 14-year-old Bank of America Plaza; Cousins owns 90%.

In the Austin transaction, Bell says Cousins will continue to manage Frost Bank Tower. The Cousins chief calls the Texas property “a remarkable success story for our company. At the time we started, it was the tallest US skyscraper to start construction after 9/11 and the largest office tower in Austin’s history.” Frost Bank Tower stands 515 feet tall. Cousins and Pru have jointly owned the building since January 2004.

In the Atlanta deal, Bells says Cousins will be relocating its headquarters to 191 Peachtree Tower from 2500 Windy Ridge Parkway in Wildwood, Cobb County after the sale closes. Cousins sold its Wildwood development in 2004 to Atlanta-based Wells Real Estate Funds, as GlobeSt.com previously reported. Bell says he is confident the 51% leasing level at 191 Peachtree will be quickly increased by his staff’s aggressive marketing strategies. He says the building has “enormous value creation potential.”

Coincidentally, Cousins and Houston-based Hines co-developed 191 Peachtree in 1990. Hines represented the equity ownership interests of Dutch Institutional Holding Co.

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