HOUSTON — Hines, a Houston-based international real estate firm, has sold the 64-story Williams Tower in Houston through Hines Real Estate Investment Trust (Hines REIT) to Invesco Real Estate for $412 million. Invesco, also based in Houston, is a real estate investment firm with more than $49.9 billion in its portfolio.
Williams Tower is a 1.4 million-square-foot, Class A office building. The tower was the tallest skyscraper in the world outside of a Central Business District when it was constructed in 1983. The office building is more than 95 percent leased to tenants such as Williams Corp., Hines, NextiraOne, Rowan Cos., Quanta Services and Cadence Bancorp.
“Williams Tower is a world-class building that has been one of Hines REIT's most significant investments,” says Charles Hazen, president and CEO of Hines REIT. “It is also a very important property to Hines as a firm and to the city of Houston. This has been a great investment that delivered strong cash flows and a positive return to Hines REIT.”
Hines has managed the property for three decades and will continue to manage it once it trades hands. Hines REIT acquired the property in 2008. Additionally, the office tower serves as Hines’ corporate headquarters.
Jones Lang LaSalle’s Capital Markets team represented Hines REIT in the transaction. The team included managing director Michael Zietsman, executive managing director Tom Melody and president of Houston brokerage Dan Bellow, as well as Mike Melody, Rudy Hubbard and James Tramuto. Also, Jones Lang LaSalle’s Capital Markets president and CEO Jay Koster and international director Steve Collins provided international expertise.
“Williams Tower is one of Houston's most visible and incomparable buildings and, as such, drew intense interest from investors around the globe. Amongst the best and final offers included investors from the Middle East, Asia and Europe, with Invesco ultimately coming out on top,” explains Melody.
Houston’s Galleria area is one of the strongest submarkets in Houston in terms of office occupancy and rents. The submarket is anticipated to experience accelerated net absorption and rent growth in 2013, according to Jones Lang LaSalle. In addition to Williams Tower, other noteworthy office sales in the Galleria area include Invesco’s purchase of 2800 Post Oak Boulevard from Hines and Allianz Real Estate’s 50 percent interest purchase of Four Oaks Place from TIAA-CREF.
“Houston has become one of the top choices for investment-grade office space, with both foreign and domestic investors flocking to the market,” says Bellow. “This strong demand for office space, robust economic growth and increasing rental rates in the Galleria/West Loop submarket made Williams Tower extremely appealing.“
Architects Philip Johnson and John Burgee designed the LEED Gold-certified tower with a gray reflective glass and anodized aluminum exterior. Columns of bay windows accent the tower with non-reflective glass and podium setbacks on two lower floors and four higher levels. The 909-foot-tall tower also features a 7,000-watt revolving beacon at its apex, which is described as an urban lighthouse. The tower is connected via skywalk to the Galleria shopping/tourist destination.
Hines REIT owns interest in 49 commercial properties spanning 23.4 million square feet of leasable space. Hines sponsors the REIT. Hines has offices in 110 cities in 18 countries and controls assets valued at approximately $22.9 billion as of December 31, 2011.
“Despite the rocky economy, Williams Tower produced solid cash flow for five years and sold for $100 more per foot than the original purchase price,” says Zietsman. “[It’s] a truly remarkable return on investment for Hines REIT.”
— John Nelson