Monday , 1 June 2020
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AEW Capital Buying Majority Stake in Heritage Plaza in Downtown Houston in $400 Million Deal at About $413 per SF

HOUSTON – AEW Capital has agreed to acquire a controlling interest in the 53-story Heritage Plaza, according to the authoritative Real Estate Alert newsletter.

The 1.15 million-sf building, known as one of Houston’s most distinctive towers because its top resembles a Mayan temple, is valued at approximately $475 million.  AEW, a Boston-based investment manager, is believed to be acquiring at least an 85 percent stake in the tower, perhaps more, the Real Estate Alert Newsletter said.

The seller, a Brookfield Office Properties partnership, retained Eastdil Secured last year to market the building, 1111 Bagby.

The sale to AEW is expected to come in at approximately $413 per square foot would be among a handful of deals bring in more than $400 per sf.  The record PSF is the price H&R REIT paid $524 per square foot or $442 million for the 845,000-square-foot Hess Tower in 2011. The 973,000-square-foot BG Group Place tower, purchased by Invesco in 2013, sold for about $485 per square foot, believed to be the second-highest per square-foot sales price ever in Houston

Brookfield Office bought the building in 2010 for $321 million or $280 per square foot from Goddard Investment of Atlanta. Since that time the Heritage Plaza occupancy rate has gone up from 84 percent to 98 percent. Major tenants include Deloitte and EOG Resources.  Rising downtown occupancy and stronger rental rates have pushed up the value of Houston office buildings and several major deals have been done.

A number of Houston’s large office properties have sold over the last year. In 2013, Invesco Real Estate paid $480 million for BG Group Place, a 973,000-sf Hines building at 811 Main Street. In another huge deal Cousins Properties bought the 10-building Greenway Plaza for about $950 million.

Heritage Plaza, completed in 1987,  once housed the Texaco oil company.

– Ralph Bivins, Editor, RealtyNewsReport

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