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PORTLAND, OR-Shorenstein Properties LLC of San Francisco has closed on its acquisition of Equity Office Properties’ 4.2-million-sf local portfolio from the Blackstone Group, which acquired EOP in February and immediately began selling it off in smaller chunks by market.

The portfolio includes 46 buildings and three development parcels capable of supporting an additional 550,000 sf. Local industry sources tell GlobeSt.com the purchase price is approximately $1.1 billion, which equates to $262 per sf. Neither Shorenstein nor Blackstone would confirm the price.

The transaction, which GlobeSt.com first reported in mid-February, is the largest in the history of Portland. It is also the largest-ever acquisition for Shorenstein, which sponsors a series of closed-end funds. The Portland portfolio was acquired on behalf of its eighth investment fund, formed last year with $1.1 billion in committed capital, including $100 million from Shorenstein.

The portfolio includes a huge concentration in the Kruse Way submarket, which is approximately 10 miles south of Downtown Portland in Lake Oswego. The submarket is the tightest in the region and also boasts the highest rental rates. Shorenstein’s 17-building, one-million-sf holding there gives it at least a 75% share of the submarket, local sources tell GlobeSt.com. Two of the three development parcels in the deal are in the Kruse Way submarket.

Across Interstate 5 from Kruse Way, near Washington Square Mall, Shorenstein now also owns Lincoln Center, a seven-building, 735,000-sf class A office park, and Nimbus Corporate Center, a 17-building, 690,000-sf flex-office campus. In Downtown Portland, the portfolio includes Congress Center (23 stories, 363,000 sf), Umpqua Bank Plaza (19 stories, 270,000 sf), and the third development parcel. Located at First and Main, EOP had been planning to break ground this year for a 15-story, 325,000-sf office building. Shorenstein tells GlobeSt.com it is considering its options for the site.

As of the end of the 2006, EOP’s Portland portfolio was 92.2% leased and the average annualized rent per sf was $23.00. Individual building occupancies ranged from 73.5% (Kruse Oaks I) to 100% (4004 Kruse Way Place, Kruse Woods V, 5550 Macadam). The average rental rate range was $15.79 (Nimbus Corporate Center) to $30.23 (Kruse Woods V).

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