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Nov. 26, 2012

W.P. Carey Affiliate Buys KBR Tower for $174.6M

By Georgiana Mihaila, Associate Editor

The 1.04 million-square-foot KBR Tower in Houston’s Central Business District, along with its adjacent 1,500-space garage, have traded hands for $174.6 million; the buyer is Corporate Property Associates 17-Global, a public non-traded REIT affiliate of W. P. Carey Inc.

Allied Advisors both represented buyer CPA®:17 – Global in securing acquisition financing and advised the seller, a joint venture between Brookfield Office Properties and Kellogg Brown & Root Inc. (“KBR”)

KBR is also the main tenant of the 40-story building, occupying 87 percent of its namesake tower. In February 2010, KBR signed an industry-leading 20-year net lease renewal and expansion with Brookfield for 1.2 million square feet at KBR Tower and the adjacent 500 Jefferson St. garage, widely considered to be the largest U.S. office lease since fall 2008.

Commenting on the acquisition, W. P. Carey Executive Director Chad Edmonson noted, “We are extremely excited to work with a great tenant like KBR as well as complete yet another transaction with an affiliate of Brookfield. In addition, as an important location for KBR, it meets our criteria of acquiring critical facilities leased to established corporate tenants on a long-term basis. The property’s prime location in Houston’s CBD was also a positive factor in our overall analysis of the investment.”

KBR Tower, located at 601 Jefferson St. in downtown Houston, is currently 99.8 percent occupied, with the majority leased by KBR and the balance occupied by a mixture of office and retail tenants.

The 40-story building was completed in 1973. The Energy Star-certified building is part of the master‐planned Cullen Center complex, which is adjacent to the downtown YMCA and the Downtown Club at The Met sports and wellness club. Cullen Center is surrounded by numerous Metro stops and offers access to the freeway system.

Image courtesy of Blair McFarlain via Wikimedia Commons

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