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Crescent Sells Austin Office Property to NNN Realty

Triple Net-Lehman JV Picks Up 5 of 6 Class A Buildings Purged From REIT's Texas Portfolio
July 11, 2007
Crescent Real Estate Equities Co., a Texas-based REIT, sold two Class A assets in Austin. California-based NNN Realty Advisors Inc. acquired The Avallon, a 317,136-square-foot office center in Northwest Austin. Triple Net Properties LLC, a NNN Realty Advisors subsidiary, partnered with New York investment banking firm Lehman Brothers to purchase 816 Congress, a 433,024-square-foot, Class A office tower in downtown Austin. The deals closed on Wednesday, July 10. Although the sales prices have not been disclosed, it is estimated that Crescent sold the portfolio for $187 to $220 per square foot because of recent office sales in the Austin market. Crescent said it will realize an $82.5 million gain from the sales in the third quarter.

The Avallon consists of five Class A office buildings totaling 317,136 square feet on more than 16 acres in Austin's high-tech hub. There are 25 tenants occupying nearly 97% of the property, including BMC Software and Pavilion Technologies. The rent ranges between $18 and $20 per square foot/year, according to CoStar information. The Avallon has nearly 1,100 parking spaces. The five-building portfolio includes:
· Building I at 10415 Morado Circle, a three-story, 60,059-square-foot property delivered in 1986. It is 89% leased.
· Building II at 10415 Morado Circle, a three-story, 32,054-square-foot property delivered in 1986. It is 94.7% leased.
· Building III at 10415 Morado Circle, a three-story, 32,765-square-foot property delivered in 1986. It is 100% leased.
· Building IV at 10814 Jollyville Road, a three-story, 85,916-square foot building delivered in 2001. It is 100% leased.
· Building V at 10431 Morado Circle, a five-story, 106,342-square-foot property delivered in 1997. It is 100% leased to BMC Software.

The building at 816 Congress Ave. is a 24-year-old trophy office tower on 1.55 acres in the central business district. It has 631 covered parking spaces. The Class A asset has been a haven for law firms and lobbyists because of its close proximity to the Capitol. The 20-story building is 76% leased to 44 tenants. The tenant roster includes Lloyd Gosseling Attorneys at Law, Bickerstaff Heath Delgado Acosta LLP and the U.S. Attorney's Office for the Western District of Texas. The rent is $18.53 per square foot/year, according to CoStar.

Russell Ingrum and Todd Mills of CB Richard Ellis represented Crescent Real Estate Equities in both sales. Lehman Brothers provided financing in the 816 Congress deal. Wally Reid of Holliday Fenoglio Fowler arranged the financing provided by MMA Realty Capital in the sale of The Avallon.

In two previous Austin office deals this past March, Crescent sold the 343,664-square-foot Austin Centre office building to Walton Street Capital LLC for $75.5 million or $219.69 per square foot, and the 418,338-square-foot 301 Congress Ave. office tower to National Office Partners LP, a joint venture between Hines and CalPERS, for $78.2 million, or approximately $187 per square foot.

For more information, see CoStar COMP Nos. 1342643 and 1314906.

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