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Deal of the Week: Building could get a new address

Owners will give major upgrades to 20-story structure in Cullen Center

By Updated
Brookfield has sold the 600 Jefferson office building to a partnership of DRA Advisors and Stream Realty Partners. The building, which has United Airlines as a main tenant, went for $69 million, according to Brookfield reports.

Brookfield has sold the 600 Jefferson office building to a partnership of DRA Advisors and Stream Realty Partners. The building, which has United Airlines as a main tenant, went for $69 million, according to Brookfield reports.

Houston's biggest downtown landlord just got a little bit smaller.

Brookfield has sold the 600 Jefferson office building to a partnership of New York-based DRA Advisors and Dallas-based Stream Realty Partners. The new owners are planning major upgrades of the 20-story building designed in the 1960s.

The deal represents the third building in Cullen Center that Brookfield has sold in as many years.

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"KBR Tower, 500 Jefferson and 600 Jefferson were considered by Brookfield to be non-core assets," said Paul Frazier, a senior vice president at Brookfield. "They're older buildings, considered Class B. While they have significant occupancy with great tenants, it was time to harvest the capital out of those buildings."

The 449,087-square-foot building, which has United Airlines as a main tenant, fetched $69 million, according to financial reports by Brookfield.

DRA Advisors and Stream Realty Partners are planning to reposition the property, which was previously known as Continental Center II for United Airlines' Houston-based predecessor.

"The goal is to improve the general look and feel of the building," said Paul Coonrod, managing director of Stream Realty Partners' Houston office team. "It will be very clear there is a new ownership."

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Plans are still being formulated, but one possibility is changing the address of the building, which sits on the block bounded by Jefferson, Louisiana, St. Joseph Parkway and Smith, to something more recognizable as being downtown with more prominent drop-off areas, Coonrod said. Updated finishes throughout the building and upgrades to the restrooms are part of the plans.

"The opportunity to find a building with a functional floor plate on a full city block that has outstanding ingress and egress to all major thoroughfares is relatively rare," Coonrod said. "It's a repositioning play where we see that there is an opportunity to improve the curb appeal and the main entrance, and the look and feel of the lobby."

The partners recently completed a similar project at The Bellevue, a boutique office building at 2323 S. Shepherd on the edge of River Oaks. They sold the building to Principal Financial Group in August after a nearly three-year hold period, which included creating a more streamlined layout and a redesigned lobby.

Coonrod estimated the time frame for redeveloping and selling 600 Jefferson at five to seven years.

Brookfield had owned the Cullen Center buildings since the acquisition of Trizec Properties in 2006. Cullen Center, which connects several office buildings and the Crown Plaza Hotel by skybridges, was developed by the family of Houston oilman and philanthropist Hugh Roy Cullen in the early 1960s.

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Brookfield continues to manage the two other Cullen Center buildings it sold, which are primarily leased to KBR. An affiliate of New York-based W.P. Carey purchased 500 Jefferson in 2013 and KBR Tower at 601 Jefferson in 2012.

Brookfield's portfolio now consists of six Class A downtown buildings totaling 6.2 million square feet: 1600 Smith in Cullen Center, which was built in 1984 and also has United Airlines as a tenant; One Allen Center; Two Allen Center; Three Allen Center; Total Plaza at 1201 Louisiana; and Heritage Plaza, in which it owns 10 percent. Brookfield sold a majority interest in Heritage Plaza to AEW Capital Management in March.

Danny Miller of HFF represented Brookfield in the 600 Jefferson sale.

DRA Advisors, which also owns industrial and apartment properties in Houston, has been active on the local real estate front. The company sold the 184,000-square-foot Westchase Corporate Center building to Clarion Partners in August.

 

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Katherine Feser is a business reporter for the Houston Chronicle covering real estate and special sections. She can be reached at katherine.feser@houstonchronicle.com.