Brookfield Property Partners, owner of Allen Center and other downtown skyscrapers, is expected to announce Monday that it has closed on a mega-deal to purchase Houston Center, giving the company control over an even greater portion of urban real estate.
The deal includes 4.2 million square feet of office and retail space in buildings spanning 9.2 acres and several blocks around the intersection of McKinney and San Jacinto on the southeastern part of downtown.
The buildings include the 46-story LyondellBasell Tower, the 51-story Fulbright Tower and the 40-story 2 Houston Center. The smaller 4 Houston Center and Shops at Houston Center are also part of the acquisition.
The purchase price was not disclosed but sources pegged the deal at about $875 million earlier this year.
The new owner said the complex has a "stellar tenant roster" but the building's lobbies, skybridges and plazas need upgrading and the offering of amenities need improving.
"The focus of our redevelopment efforts is going to be on enhancing the overall tenant experience," Travis Overall, executive vice president and head of the Texas region for Brookfield, said in an email.
He said the company is soliciting proposals from designers.
With some 12 million square feet, Brookfield is downtown's largest landlord of commercial space.
On the west side of downtown, Brookfield has undertaken a $48.5 million renovation of its Allen Center development.
Part of the renovations included the development of a one-acre park branded "The Acre." The greenspace has a plaza and lawn that can seat up to 1,500 people for concerts and other events. In late 2016, Brookfield also purchased the adjacent DoubleTree Hotel, where it is planning a renovation and rebranding.
Overall said the acquisition of Houston Center reflects the company's belief in the strength of downtown Houston.
"The combination of Houston Center's premier location, superior amenities, diverse tenant base and underutilized space, together with Brookfield's placemaking expertise and plans for meaningful capital upgrades, creates a significant and unique opportunity," he said in a statement.
Houston Center has changed ownership several times since the development broke ground in the 1970s.
Brookfield purchased the property from institutional investors advised by J.P. Morgan Asset Management, which became the sole owner in 2011. HFF represented the seller.
The 5 Houston Center building is owned by Spear Street Capital and not part of the deal.
Brookfield, part of Toronto-based Brookfield Asset Management, acquired Houston Center on behalf of a private real estate fund.
Bob Eury, executive director of the Houston Downtown Management District, said the property is poised for a redevelopment.
"The office campus of the future is changing," he said in a statement, noting how mixed-use developments are increasingly sought after by office tenants.
In addition to four office buildings, Houston Center has three stories of retail space filling 196,000 square feet.
The complex is 72 percent occupied. Brookfield has hired Transwestern to oversee leasing operations.
Separately, Brookfield is pursuing a deal to acquire national mall operator GGP Inc., which owns multiple properties in the Houston area.
Brookfield, which already owns about 34 percent of GGP Inc. stock, made an unsolicited bid for the rest of the company in a deal valued at $14 billion.
Chicago-based GGP confirmed the proposal in November and said it is being evaluated. Brookfield declined to comment further.
GGP's local properties include Baybrook Mall, Deerbrook Mall, First Colony Mall, The Woodlands Mall and Willowbrook Mall....Read more