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EOP Pares Portfolio Before Sale To Blackstone

Top Office REIT Sheds $1.4B in Properties in Fourth Quarter
January 9, 2007
In keeping with its investment strategy announced prior to accepting the $36 billion buyout from private equity investor Blackstone Group, Equity Office Properties Trust (NYSE: EOP) whittled away its portfolio last quarter, selling 16 properties to various buyers for a total of $1.4 billion.

The fourth quarter dispositions spanned 6.5 million square feet and included properties located in six states: California, Colorado, Georgia, Illinois, Massachusetts and Minnesota.

The California State Teachers' Retirement System (CalSTRS) took title to six properties in Denver totaling more than 1.6 million square feet for a total of about $260 million, according to information obtained by CoStar. The portfolio has an average occupancy level of 91.25% and includes:

  • Denver Corporate Center II and III, two buildings at 7800 and 7900 E Union Ave. totaling 375,139 square feet. CalSTRS paid $45.6 for the properties;

  • The Quadrant, a 317,218-square-foot building at 5445 DTC Parkway. It was sold for about $63.5 million;

  • Metropoint I & II, two buildings at 4600 and 4610 S. Ulster St. totaling 414,389 square feet. CalSTRS paid a total of $81.1 million for the properties;

  • 4949 S Syracuse, a 62,633 square-foot building was acquired for $9.6 million;

  • Terrace Building, a 115,408-square-foot building at 5575 DTC Parkway. CalSTRS paid $15.6 million for the property and

  • Millennium Plaza, a 330,033-square-foot building at 6200 S Quebec St. acquired for $44.6 million, according to CoStar information.

The Chicago-based REIT sold three properties in its hometown. Boston-based Colony Realty Partners LLC agreed to acquire the 546,263-square-foot Tri-State International Center in Lincolnshire, IL, for $75 million.

A venture between local firm GlenStar Properties LLC and Prudential Real Estate Investors agreed to pay $130 million for Presidents Plaza, a two-building, 818,712-square-foot property at 8600 and 8700 Bryn Mawr Ave. near the O'Hare International Airport, according to Crain's Chicago Business.

The 677,222-square-foot tower at 200 West Adams sold for $115 million to a venture between Sterling Equities Inc. and Lincoln Property Co.

In California, EOP sold four properties. Hines acquired the 1.2 million-square-foot Watergate Office Towers in Oakland, CA, for an estimated $500 million.

Principal Real Estate Investors, out of Des Moines, IA, acquired Cerritos Towne Center, a five-building, 461,794-square-foot property in Los Angeles in November. The purchase price could not be learned.

Kaiser Foundation Health Plan Inc. acquired the 150,951-square-foot building at 3280 E Foothill Blvd. in Pasadena, CA, for an undisclosed purchase price.

EOP also sold the 304,241-square-foot property Central Park Plaza in San Jose, CA. Details could not be learned.

Meanwhile, Zeller Realty Group acquired LaSalle Plaza, a 588,908-square-foot building at 800 LaSalle Ave. in Minneapolis in November for a reported $100 million.

In Atlanta, local multifamily developer The Worthing Cos. acquired the seven-building property at 20-32 Perimeter Center for an undisclosed price. The buildings will be converted into apartments.

EOP had owned an 8.1% stake in The John Hancock Complex in Boston. Beacon Capital Partners recently sold the property to Broadway Real Estate Partners in a large portfolio deal that valued the three-building complex at more than $1 billion. Broadway has since sold off the two smaller properties at 197 Clarendon and 200 Berkeley streets.

Sales Tempered by 3 Acquisitions

Despite the heavy pruning, the REIT also made three significant acquisitions last quarter, totaling $479.6 million. It bought a 50% stake in the 1.1 million-square-foot Wachovia Financial Center at 200 S Biscayne Blvd. in Miami for $194 million. The deal valued the property at just under $340 per square foot. EOP replaced KanAm's interest to join Macquarie Office Trust in the venture.

EOP also bought out its partner, identified as the New York State Common Retirement Fund, in the 1.5 million-square-foot Columbia Center in Seattle.

And in Manhattan, it acquired a 75% stake in the tenant-in-common entity that owns the 16,000-square-foot office building at 124 W 42nd St. in a deal that valued the property at $24.8 million or $1,549 per square foot, according to CoStar information.

The investment activity wrapped up what in all likelihood will be the Chicago-based REIT's last as a publicly traded entity, which sold $2.2 billion and acquired $1.4 billion worth of properties overall for the year.

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