Brookfield Sells KBR Tower for $174.6M

Brookfield Office Properties Inc. along with joint venture partner KBR Inc., sold the KBR Tower office building and adjacent garage in Houston to Corporate Property Associates 17-Global, a public non-traded REIT affiliate of W.P. Carey Inc. for $174.6 million.

Brookfield's U.S. Office Fund (in which Brookfield owns an 84 percent interest) had owned a 50 percent interest in the building through a joint venture with KBR. Net proceeds to Brookfield were approximately $76 million.

KBR Tower, located at 601 Jefferson St. in downtown Houston, contains 1.05 million sq. ft. of headquarter office and retail space, with an adjacent 1,500-space garage. Brookfield acquired its stake in the 40-story tower as part of the Trizec portfolio in 2006.

KBR occupies 87 percent of its namesake tower, which is 99.8 percent leased. In February 2010, KBR signed an industry-leading 20-year net lease renewal and expansion with Brookfield for 1.2 million sq. ft. at KBR Tower and the adjacent 500 Jefferson St.

Allied Advisors LLC advised the joint venture in the sale of KBR Tower and arranged acquisition debt on behalf of the purchaser.

Brookfield retains a sizeable market share of class A office product in downtown Houston, with eight properties totaling 8.4 million sq. ft.

Brookfield announced the sale simultaneous to announcing the $205.5 million sale of the Target headquarters building in Minneapolis. The two sales generated net proceeds of $182 million for Brookfield.

"These dispositions continue our active capital recycling program over the past two years in which we have sold seven mature or non-strategic assets and reinvested proceeds into higher-yielding strategic opportunities," Brookfield Office Properties CEO Dennis Friedrich said in a statement.

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