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HOUSTON-Brookfield Real Estate Opportunity Fund has shed more from its massive JPMorgan Chase & Co. portfolio collected in 2006 with the sale of a five-property, 158,033-square foot collection of class B buildings. SLS Houston Properties LLC’s willingness to take the entire package meant it was selected as the buyer.

“We offered this on a single-asset basis, any combination or as the entire portfolio. There was quite a bit of interest on the single assets and the combination of assets,” says H. Dan Miller, senior managing director with Holliday Fenoglio Fowler LP’s Houston office. Miller, who had the marketing assignment with HFF analyst Trent Agnew, tells GlobeSt.com that SLS Houston came up with the strongest bid for the entire portfolio. “Rather than have multiple escrows and contracts, the owner elected to go with a single portfolio buyer,” Miller says.

The portfolio is close to 80% leased, with JPMorgan Chase occupying 43%. The five buildings were part of a massive buy Brookfield Real Estate Opportunity Fund made in 2006 for a nationwide, 5.3-million-square-foot portfolio.

“These buildings needed to be leased up and stabilized, and that’s what Brookfield did,” Miller says. “They executed the leasing and renovation plan, then put them on the market.”

Class B office buildings in the Houston area typically trade anywhere from $60 to $80 per square foot or higher. Miller points out, however, that these particular assets were unique, as they all have JP Morgan Chase as a long-term tenant.

Furthermore, because there is a drive-through component with the buildings, “the bank has a considerable amount of infrastructure in place. There’s a high degree of certainty they’ll be there for a long time,” Miller says. “When you combine a long-term credit lease like that with local tenants like these buildings have, it’s an ideal scenario. Any potential downside is protected by the bank lease.”

Miller says the deal offers SLS Houston some upside through the lease-up of vacant space and the rolling of some of the current tenants to market rents. Furthermore, most of the properties has additional land that could offer more value through improvements.

The 1980s portfolio consists of the 54,042-square-foot Gulfgate at 2900 Woodridge; the 29,458-square-foot West Oaks at 6200 Highway 6 South and the 23,002-square-foot Westwood on 9525 Bissonnet.

Also in the portfolio are the 21,662-square-foot Stafford at 11806 Wilcrest and the 29,051-square-foot Cyfair, at 13103 Farm-to-Market 1960 W.

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