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W.P. Carey Takes KBR Tower in Houston For $174.6M

40-Story Building 90% Leased to Global Engineering Firm
November 26, 2012
A affiliate of W. P. Carey Inc. has acquired the 40-story KBR Tower office building in Houston's CBD.

CPA®:17 - Global, a non-traded REIT affiliate of publicly traded W.P. Carey (NYSE: WPC), purchased the 1,047,748-square-foot building at 601 Jefferson St. for $174.6 million from an affiliate of Brookfield Office Properties Inc. (NYSE: BPO).

Kellogg Brown & Root, Inc. (KBR), occupies about 900,000 square feet under a net lease with a remaining term of about 18 years. KBR is a global engineering, construction and services company supporting the energy, hydrocarbon, government services, minerals, civil infrastructure, power, industrial and commercial markets.

In total, the tower is 99.8% leased, with the balance occupied by a mixture of office and retail tenants. The acquisition includes a 1,499-space parking garage.

The long-term lease of a critical facility to an established corporate tenant like KBR as well as the property's prime location in Houston's CBD were main factors in making the investment, said W. P. Carey Executive Director Chad Edmonson.

"As they have on past deals with Brookfield affiliates, they were able to turn the transaction around quickly and meet our critical timing and other closing requirements," added Dennis Friedrich, CEO of Brookfield Office Properties.

Reed Smith LLP represented the W.P. Carey affiliate as general real estate and transaction counsel in the closing, while Allied Advisors helped secure acquisition financing and also represented the seller in the disposition.

For more information on this transaction, please see CoStar COMPs #2602729.

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