HOUSTON CBD CAMPUS PORTFOLIO ACQUISITIONS

The objective of this project was to complete a property assemblage in downtown Houston to allow the company to expand its existing offices into a CBD office campus. The company owned a fifty story office tower at 1500 Louisiana and leased 100% of the former Enron office building at 1400 Smith from Brookfield.  We acquired the 1.1 million sf Brookfield office tower and attached sky ring that connected both properties at the intersection of Smith and Bell Streets.   A buy vs lease analysis demonstrated that acquisition of the Brookfield building resulted in the most cost effective use of capital.  The Brookfield building acquisition required defeasance of a $200 million CMBS securitized loan.  The defeasance was accomplished through a commercial defeasance company prior to close of escrow. 

As a condition of the purchase of the Brookfield building, the company also absorbed rights and obligations associated with underground pedestrian tunnels within the confines of the property boundaries and an easement for the sky ring.

Brookfield also owned a central plant, providing heated and chilled water for building air conditioning.  The central plant serviced 3 other buildings in downtown Houston under a supply contract that was very favorable to the plant owner.  Portions of the supply contract were renegotiated to improve the company’s position in the event the plant owner failed to perform in the future.

To allow for construction of a third office tower, necessary to grow the campus, we acquired the adjacent YMCA building and lot.  The 10 story, 85,000 sf, YMCA building was built in 1941 and had approximately 100 residential apartments.  To protect the company from exposure to liability for asbestos removal and disposal, the purchase contract was structured to close escrow after demolition of the building by the YMCA.

Construction of a third office tower would require additional parking capacity.  The parking garage located at Bell and Louisiana Streets was acquired from Met Life.  This deal was structured as a sale-lease back for 4 years to allow MetLife time to complete a replacement garage several blocks away.

One additional block (Blk 352) was acquired from two property owners at the SE corner of Milam & Leeland Streets.  This property houses the Houston Press Building and additional surface parking.

HOUSTON CBD OFFICE CAMPUS