Brookfield Office Properties Inc. (BPO) sold towers in Minneapolis and Houston, giving it net proceeds of $182 million, as investors seeking higher yields lift demand for buildings outside top-tier U.S. cities.
The $205.5 million sale of 33 S. 6th St. in Minneapolis to Shorenstein Properties LLC resulted in a net gain of $106 million, and the disposition of a 50 percent stake in Houston’s KBR Tower to a W.P. Carey Inc. (WPC) affiliate brought proceeds of $76 million, New York-based Brookfield said today in a statement.
Buildings in so-called secondary cities made up 31 percent of office transactions this year through the third quarter, compared with 23 percent all of last year, according to Real Capital Analytics Inc. Those markets exclude New York, San Francisco, Los Angeles, Washington, Chicago and Boston.
The 50-story Minneapolis property has 1.1 million square feet (102,000 square meters) of office space, 370,000 square feet of retail and 687 parking spaces. Anchor tenant Target Corp. (TGT)’s lease for 72 percent of the office space runs through 2023, Brookfield said. The building is 95 percent leased.
KBR Tower, at 601 Jefferson St. in Houston, has 1.05 million square feet of office and retail space and an adjacent 1,500-space garage. Engineering company KBR Inc. (KBR) has its headquarters at the almost fully leased building, occupying 87 percent on a 20-year lease signed in 2010.
“These dispositions continue our active capital recycling program over the past two years in which we have sold seven mature or non-strategic assets,” Brookfield Chief Executive Officer Dennis Friedrich said in the statement.
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