Investment Partners Buy Out Lehman Bros., Offshore Sovereign Wealth Fund In 3 Mil.-SF Portfolio Valued at $286/SF
Thomas Properties Group Inc. teamed with its longtime investment partner, the California State Teachers' Retirement System (CalSTRS), to acquire full ownership of an eight-building, 3 million-square-foot portfolio of office properties in downtown and suburban Austin, TX.
The portfolio was purchased from TPG-Austin Portfolio Syndication Partners, a venture among Lehman Brothers Holdings Inc. (50%), an offshore sovereign wealth fund (25%) and TPG/CalSTRS LLC (25%).
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The portfolio sale was valued at $859 million or about $286.33/square foot.
Thomas Properties Group and CalSTRS have formed a new venture, known as TPG/CalSTRS Austin LLC, to own the Austin portfolio. Thomas Properties Group's subsidiary is the managing member with a 50% interest and CalSTRS owns the remaining 50% interest.
Concurrently, Thomas Properties Group agreed to sell a one-third interest in Thomas Properties Group's subsidiary that owns the interest in TPG/CalSTRS Austin to an affiliate of Madison International Realty. Thomas Properties Group is the managing member of the subsidiary and will act on its behalf as the manager of TPG/CalSTRS Austin.
As part of the purchase price, TPG/CalSTRS Austin assumed five existing first mortgage loans totaling $626 million.
The transaction reduced the existing leverage on the portfolio by repaying $200 million owed to Lehman Commercial Paper Inc. Thomas Properties Group retains all operating responsibilities for the properties and the existing Austin leasing and management team will remain in place.
"In keeping with our strategic plan to acquire wholly-owned or equally-controlled properties that are accretive to our after tax cash flow, we are pleased with the opportunity to increase our investment in Austin and more particularly, in a group of assets that we consider to be crown jewels. We are very encouraged by the continued strength in the Austin market and the prospects for future growth," said Thomas Properties Group chairman and CEO James Thomas
"These are dynamic properties in a fast-growing market that continues to demonstrate strong fundamentals," said Ronald Dickerman, president of Madison International Realty. "The portfolio fits well with Madison's investment strategy focusing on the acquisition of partial interests in core assets."
The Austin portfolio includes five downtown Austin properties known as Frost Bank Tower, 300 West 6th Street, One American Center, San Jacinto Center and One Congress Plaza, as well as three suburban properties known as Westech 360, Park Centre and Great Hills Plaza in Northwest Austin.
Separately, Thomas Properties Group also owns Four Points Centre in Far Northwest Austin and operates downtown's 816 Congress and Austin Center for owner Lehman Brothers Holdings Inc.
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