Brookfield Office Properties Inc. (NYSE: BPO) (TSX: BPO) today announced that it has entered into a joint venture partnership with AEW Capital Management, L.P. on the Heritage Plaza office building in downtown Houston. AEW has purchased a 90% interest in the venture; Brookfield will maintain a 10% interest and will continue its leasing and property management responsibilities at the building. AEW acquired the interest on behalf of the AEW Core Property Trust (U.S.), an open-end real estate fund.
Brookfield acquired Heritage Plaza in December 2010 in a deal that valued the building at $286 per leasable square foot. Net proceeds to Brookfield Office Properties, which sold a 41% interest in the property upon formation of the joint venture with AEW, total approximately $118 million. The remaining 49% interest sold to AEW was owned by an affiliate.
The building is 98.4% leased, up from 84% leased when Brookfield took control of the building. Anchor tenants include Deloitte and EOG Resources.
"This transaction aligns with Brookfield's strategy of creating value in an asset through proactive leasing and asset management and then extracting proceeds for use in other endeavors, such as our various development and redevelopment initiatives," said Dennis Friedrich, chief executive officer of Brookfield Office Properties.
"Led by the energy sector, Houston has consistently been one of the fastest growing metro areas in the nation," said Dan Bradley, portfolio manager for the AEW Core Property Trust. "Rapid job growth and expanding business activity have supported very strong demand for office space and we believe this investment capitalizes on these trends."
Heritage Plaza, at 1111 Bagby Street, overlooks historic Sam Houston Park and is well-known for its distinctive design elements, a recognizable marker on the Houston skyline. The building is convenient to major thoroughfares and provides direct passage to adjacent buildings and surrounding amenities via a sky bridge. Tenant amenities include ample on-site parking and a fitness center.
About Brookfield Office Properties
Brookfield Office Properties owns, develops and manages premier office properties in the United States, Canada, Australia and the United Kingdom. Its portfolio is comprised of interests in 114 properties totaling 85 million square feet in the downtown cores of New York, Washington, D.C., Houston, Los Angeles, Toronto, Calgary, Ottawa, London, Sydney, Melbourne and Perth, making Brookfield the global leader in the ownership and management of office assets. Landmark properties include Brookfield Places in Manhattan, Toronto and Perth, Bank of America Plaza in Los Angeles, Bankers Hall in Calgary and Darling Park in Sydney. The company's common shares trade on the NYSE and TSX under the symbol BPO. For more information, visit www.brookfieldofficeproperties.com.
Founded in 1981, AEW Capital Management, L.P. (AEW) provides real estate investment management services to investors worldwide. One of the world's leading real estate investment advisors, AEW and its affiliates manage over $37 billion of capital invested in $50.8 billion of property and securities in North America, Europe and Asia (as of September 30, 2013). Grounded in research and experienced in the complexities of the real estate and capital markets, AEW actively manages portfolios in both the public and private property markets and across the risk/return spectrum. AEW and its affiliates have offices in Boston, Los Angeles, London, Paris, Hong Kong and Singapore, as well as additional offices in eight European cities. For more information please visit www.aew.com.