At the 2013 Mortgage Bankers Association CREF/Multifamily Housing Conference, Marisha Clinton, director of research, Capital Markets, at Jones Lang LaSalle, names markets and industries that are on the “to watch” list for real estate investors.

Jay Epstien, of DLA Piper

Low interest rates, abundant capital and a slowly improving economy are among the top reasons why 85 percent of commercial real estate executives interviewed for the 2013 DLA Piper State of the Market Survey said they are feeling bullish about the sector for the next year.

That number jumped from 30 percent in October 2011 when the last DLA Piper market survey was done. In April, DLA Piper emailed a survey to top real estate executives, including CEOs, COOs, CFOs, and other senior executives. The law firm received 189 responses. The 2013 State of the Market Survey coincides with DLA Piper’s 2013 Global Real Estate Summit held in Chicago on April 30.

The survey found that although the U.S. economy isn’t booming, 40 percent of respondents stated the continuing strength of the national economy was the primary reason for their bullish outlook. Nearly 33 percent cited the abundance of debt and equity capital available for investment and about 24 percent said it was the continuation of low interest rates.

Calling it a “very significant jump,” DLA Piper U.S. Real Estate Practice Chair Jay Epstien told Commercial Property Executive that the increased optimism among CRE executive was “attributable to low interest rates and an environment where we have abundant capital supply – the ultimate drivers of the industry.”

“You can borrow at interest rates that nobody ever imagined in commercial real estate,” he added.

While the executives know that the low interest rates are being artificially maintained, the survey showed 99 percent of those questioned believed the Fed’s pledge to keep interest rates low through the end of 2014 and felt there would be little or no change in the coming year. About 50 percent said the rates could edge up slightly, while 48.7 percent said there would be no change.

For the 15 percent of executives who are feeling bearish about the year ahead, 48.8 percent of them cited the slow U.S. job growth followed by 36.6 percent who blamed continued gridlock by legislators in Washington, D.C. Just under 10 percent cited the ongoing European debt crisis. However, the European sovereign debt crisis was the top choice when the executives were asked about external global impacts on the U.S. CRE market. That was followed by the break-up of the euro and slower growth in China.

Back at home, eliminating political gridlock was the number one answer when the respondents were asked what the U.S. must do to get its fiscal house in order. Reducing and/or rationalizing entitlement programs came in second, followed by tax reform, reducing corporate tax rates and introducing new stimulus measures. Nearly three-quarters of the respondents don’t believe Congress will vote in the coming year to eliminate the “carried interest” provision, which would impact investors in real estate partnerships, joint ventures and private equity funds.

The survey noted that 68 percent of the executives expect cap rates to remain steady for the next 12 months. But 18 percent believe cap rates are headed down.

Epstein noted that the question didn’t specify cap rates for specific asset classes or cities, but he believed, “cap rates are about as low as they’re going to go.”

Asked what types of equity investors they think will be the most active, 29 percent said private equity, 26 percent said foreign investors and 23 percent said pension funds. REITs received about 18.5 percent of the responses, similar to last year’s survey when 16 percent said REITs would be the most active investors. In 2010, nearly 30 percent of the respondents chose REITs.

Most of the respondents said they thought healthcare would present the most attractive opportunity for investors in the next twelve months, followed by multi-family, industrial, hotel, office downtown, retail and office suburban.

Even though healthcare is a specialized segment, the report noted that it was “recognized for its investment stability, superior performance and long-term opportunity following the re-election of President Obama and the implementation of the Affordable Care Act, which creates the expectation of a greater need for properties serving healthcare issues.”

Multi-family ranked as the most attractive investment in the October 2011 market survey and is still considered highly attractive, according to the respondents.

The survey asked the executives which non-gateway city did they believe would perform the strongest in the United States in the year ahead and Houston and Dallas were the strong top two finishers with Miami third, followed by Seattle, Denver, Atlanta and Minneapolis.

Epstien said he wasn’t surprised that the Texas cities came out on top.

“Dallas has what is considered to be one of the most stable economies and Houston is the energy center,” he said.

Miami being in the top three made sense to him because “it is the jumping off point for all the Latin investments and jumping in point as well,” Epstien added.

When asked what international markets or regions would be most attractive for investments in the next 12 months, not surprisingly Brazil had the most responses. For the first time, DLA Piper offered Australia as a choice and it pushed China to number three and India to number four on the list followed by Eastern Europe, Western Europe and Mexico.

Epstien said the firm was surprised at how Australia placed on the list.

“It has great fundamentals, low unemployment, high occupancy, but it’s not a very deep market,” he concluded. I thought it might have been more in the middle of the pack.”

L to R: Jeanette Rice (moderator), principal, Rice Consulting. Mike Gately, managing director, research group, Cornerstone Real Estate Advisers. Jack Kern, CIRO, Continental Realty Advisors. Mike Sobolik, regional director of research, North America, INVESCO Real Estate.

Industry leaders gathered yesterday in Dallas for NMHC’s 2013 Apartment Strategies/Finance Conference. The program provided valuable insight into the financial and demographic drivers behind multi-family’s continued dominance in commercial real estate. The conference kicked off with a panel discussion on exactly what institutional capital is looking for when it comes to apartments.

Low long-term vacancy rates, strong rent growth over the last 10 years and a heightened demographic demand are three of the main drivers behind institutional hunger for apartments, said Michael Gately, managing director, research group, Cornerstone Real Estate Advisers.

“Apartments have recovered faster than other sectors. We continue to attract capital, and that reflects in current pricing, where core assets in major markets are bidding up more than they were pre-recession,” Gately added. “In some secondary markets we are seeing prices higher than replacement costs, which is a little bit concerning, though good news for sellers.”

Gately points out that the demand for apartments will only increase due to the unprecedented pullback in construction activity that occurred as a result of the recession. The supply constraint is only bolstered when you factor in the age of the national apartment stock, with 78 percent of units built prior to 1990, and two thirds built before 1980. New trends in urban living favor state-of-the-art assets, and chronically under-housed cities like New York, Boston and San Francisco (where 50 to 70 percent of the population rents) will have an easy time landing money for the newest Class A urban core products.

“There is always a premium for the newest and the best,” Gately said. “The obsolescence factor is something you can’t underestimate when you are on the leading wave.”

Although the market fundamentals remain more than solid for apartments, Gately added that there are near- term speed bumps in some markets that institutional capital is keeping an eye on. One example is the fact that the first wave of high-end high-rise development is already seeing some reluctance as rent growth slows down.

Mike Sobolik, regional director of research, North America at INVESCO Real Estate, added that institutional investors are looking for—and are willing to pay for—a long-term trophy hold. Long-term demographic drivers certainly suggest that multi-family will be firing on all cylinders for some time.

“Institutional capital is looking at the industry on the long term, and they want the high-quality core located assets,” Sobolik said. “But if you want the high-quality core located asset, you are going to pay up for it. That is what is driving the cap rates so low for the urban Class A assets.”

Sobolik pointed out that there are several factors contributing to demand over the next 10 years. New household growth is expected to increase by 15 million over the next decade, with 35 percent of that figure electing to rent. That’s 5.25 million new households in the rental market over the next 10 years. When it comes to young renters, in the pre-GSE period 27 percent of those between 20 and 34 years of age lived with their families. In 2011 that number was at 31 percent, a difference of 3 million people. As the job market continues to improve, some of these younger workers will move out into the apartment market, bringing up the demand closer to 6 million people over the next 10 years.

“But I believe this is a front-loaded demand story,” Sobolik adds. “Pent up demand is not going to take 10 years to see fruition. It is going to happen in the next three to five years.”

Jack Kern, chief investment research officer at Continental Realty Advisors, provided some insight into the locations and asset classes that institutional funds are looking for.

“To me there are three areas: downtown urban, inter-urban in the seven- to 10-mile range from CBDs and suburban. There is just such a shortage of high-quality urban core assets. On the inter-urban side, assets positioned near transportation and shopping hubs will continue to do relatively well. Unfortunately I have seen ultra-luxury buildings in suburban areas that just aren’t justified, as the people who would live in that sort of property want to be closer to the action.”

Kern proposes that owners and investors get familiar with real time mapping analytics to see how patterns vary from market to market, with changes in occupancy being the biggest indication for where opportunity exists. He adds that investors should look past the gateway markets for value, as pricing can be a bit more favorable.

“We want something that will work long term for the renter, which has been a good strategy for us, even in those Class B spaces in Orlando, Houston and Louisville.”

Gately agreed, and believes that capital is more readily flowing to secondary markets as institutional investors become more comfortable with the asset class and the demographics driving its strength.

“It is getting challenging to place core capital in the top tier, gateway markets,” Gately concluded. “Many of our clients are listening and relaxing with us. Sure they sign on for a strategy and they want some control. But before they give us parameters, I find more and more clients are relaxing and looking at the core-plus, value-add opportunities.”

One of the defining qualities of a leader is the ability to be comfortable making decisions in the midst of uncertainty, according to leadership consultant Julie Benezet, founder and managing principal of Business Growth Consulting.

Benezet, who formerly led Amazon.com’s corporate real estate department, recently spoke to attendees of the Women’s Leadership Forum at CoreNet Global’s spring meeting in New York.

Benezet pointed out that business leadership and management involve two different types of skill sets and executions. Management is concerned with ensuring a business plan goes forward, and the criteria of success and the end point of management projects are “knowns.”

Leadership, however, addresses larger strategic questions and requires the ability to inspire others to believe in a vision. A leader pursues “bigger, scarier, bets” and “to do that, she will have to go down the pathway of not knowing,” said Benezet. A leader who is correctly doing her job will be “traveling to a lot of unknown places” and “be comfortable with the discomfort of not knowing.”

Executives in the world of corporate real estate have to “figure out things long before everyone,” said Benezet. They are faced with a changing work world in which the needs for real estate are fast changing. They will ask a lot of questions for which there may not be answers. Leaders need to be “in a frame of mind that sees strategic opportunities in every moment,” Benezet added.

To pursue their dreams, Benezet suggested executives identify what drives them in their careers and in overcoming adversities, and what are their defensive mechanisms, such as micro-managing. It is only when they can properly manage their motivators and their blocks or defense mechanisms, that people can effectively pursue their possibilities, she concluded.

While working on what will soon become one of the largest corporate campuses in the world, ExxonMobil is apparently trying to minimize its office footprint throughout the country.

Just last week, the company hired Cassidy Turley to market its 117-acre corporate campus in Fairfax, Va., consisting of five buildings with 1.3 million square feet of Class A office space; underground parking structures totaling approximately 1 million square feet; and approximately 92 acres of undeveloped land. Since the company  first announced the development of the new corporate campus in Houston, there were clear mentions of the fact that its goal is that of accommodating additional employees from the immediate area and from the company locations in Fairfax, VA and Akron, OH.

Now, Exxon Mobil is also listing the ExxonMobil Chemical Company Headquarters campus in Houston’s Energy Corridor. The property, which serves as headquarters for the company’s chemical division, will be marketed by Holliday Fenoglio Fowler. A sales team has already been set in place, with HFF’s senior managing director Robert Williamson and managing director Davis Adams leading it; the debt team will be led by senior managing director Wally Reid and director Colby Mueck.

In addition to 352,170 rentable square feet of improvements consisting of an office building and conference center, the ExxonMobil Chemical Co. campus—located at 13501 Katy Freeway—features 1,000 feet of frontage on Interstate 10 and 800 feet of frontage on Memorial Drive. The property is situated on approximately 35 acres in the heart of Houston’s Energy Corridor, adjacent to the BP America Headquarters, across Interstate 10 from both ConocoPhillips and Shell Oil’s North American Exploration and Productions headquarters, and within a mile of Mustang Engineering and Dow Chemical.

ExxonMobil will be grouping more of its divisions on the campus it started building in 2011 in The Woodlands, one hour from Houston; located on a 385-acre wooded site on company-owned land near the intersection of I-45 and the Hardy Toll Road, the ExxonMobil Houston Campus will accommodate approximately 10,000 employees and is being constructed to high standards of energy efficiency and environmental stewardship. Employees will move in phases as the buildings are constructed, beginning in early 2014. Full occupancy for Houston-based employees is expected by 2015.

Image courtesy of ExxonMobil website

San Francisco-based Shorenstein Properties L.L.C. has chosen Transwestern to serve as the exclusive leasing agent for 800 Bell—the 1.2 million-square-foot office tower in Houston’s Central Business District that the company acquired back in January.

The 45-story 800 Bell St. building, known as the ExxonMobil Tower, was built in 1962 as the headquarters of Humble Oil & Refining Co., a predecessor to ExxonMobil; at that time, it was the tallest building west of the Mississippi River, at 606 feet. The property includes a seven-story parking garage covering two city blocks on the corner of Travis and Bell streets.

Current tenant ExxonMobil will vacate the building in 2015, when the development of its campus will be completed, giving Shorenstein the opportunity to deliver significant improvements to the property through an extensive redevelopment. The details of the redevelopment project have not yet been released.

For leasing, 800 Bell relies on its unique corporate identity on the Houston skyline and on the fact that it remains one of the largest blocks of contiguous space offered in Houston in more than 30 years.

“We are very excited about this unique opportunity,” said Transwestern’s Eric Anderson, executive vice president. “It is not very often that we can be a part of something as significant as enhancing the downtown Houston skyline. Shorenstein has a reputation for delivering successful signature redevelopment projects, such as Market Square in San Francisco, which includes the headquarters of Twitter, Yammer and One Kings Lane. We are excited to see what Shorenstein has in store for 800 Bell and downtown Houston.” Anderson, executive vice president David Baker and vice president Paul Wittorf will be in charge of marketing and leasing the property.

Image courtesy of Obskura via Flickr

]]> http://www.cpexecutive.com/regions/southwest/shorenstein-hires-transwestern-to-lease-1-2-msf-exxon-mobil-tower/feed/ 0 http://www.cpexecutive.com/property-types/special-report-mba-predicts-multifamily-funding-market-share-may-fall-slightly-in-2013/ http://www.cpexecutive.com/property-types/special-report-mba-predicts-multifamily-funding-market-share-may-fall-slightly-in-2013/#comments Fri, 08 Feb 2013 19:04:36 +0000 keatf http://www.cpexecutive.com/?p=1004066996 By Keat Foong, Executive Editor

San Diego—Mortgage originations for commercial properties will increase by 11 percent in 2013, the Mortgage Bankers Association (MBA) forecasted. The market share of multifamily financing may tick down this year as capital supply to the other commercial real estate sectors make a comeback.

At MBA’s Commercial Real Estate Finance/Multifamily Housing Convention & Expo, MBA released its 2013 mortgage financing outlook. Originations of commercial and multifamily mortgages will grow to $254 billion in 2013, compared to $229 billion in 2012. (In its inaugural financing volume forecast, MBA had predicted the 2012 volume to be $230 billion.)

“Our forecast anticipates Fannie Mae, Freddie Mac and FHA, as well as life insurance companies, will all continue to have strong appetites for making loans, and—coupled with growth in originations for CMBS—the total market will continue to expand,” stated Jamie Woodwell, MBA’s vice president of Commercial Real Estate Research, in a press release.

At a press briefing during the conference, Woodwell predicted that multifamily financing will total about $105 billion in 2012. This financing volume far outstripped expectation, as only $77 billion was originally forecasted for the multifamily sector for the year.

Multifamily financing volume may experience a slight shrinking in 2013 and subsequent years to “a more traditional size” relative to the overall commercial property mortgage market, said Woodwell, during a press briefing held at the conference. Woodwell said multifamily financing had seen its share of the overall commercial property financing market increase due to funding availability and multifamily fundamentals. In 2012, multifamily financing was 46 percent of total commercial property mortgage financing. As mortgage funding for the other sectors are returning a little more strongly, however, “we’ll see more of that traditional balance” between the multifamily and commercial property market shares, said Woodwell.

MBA forecasts GDP to increase to 2.0 in 2013 from 1.8 percent last year, while unemployment rate will fall to 7.6 percent, compared to 8.1 percent for 2012. MBA said the 10-year Treasury yield will rise slightly from 1.8 percent in 2012 to 2.2 percent for 2013. However, actions by the Fed, on which a large part of the interest rate prediction is predicated, could be unpredictable, noted Jay Brinkmann, chief economist and senior vice president of Research and Education.

In the fourth quarter of 2012, MBA reported that commercial and multifamily mortgage originations increased by 49 percent compared to the fourth quarter of 2012. “During the fourth quarter, commercial and multifamily mortgage borrowing and lending hit the highest level since 2007,” stated Woodwell. MBA’s mortgage bankers originations index shows originations for 2012 increased by 24 percent compared to 2011.

The fourth quarter increase in commercial/multifamily lending volume was driven by increases in originations for hotel and office properties, according to MBA. The mortgage financing volume increases, relative to fourth quarter 2011, were 331 percent for hotel properties, 78 percent for office properties, 49 percent for multifamily properties, 46 percent for industrial properties, 5 percent for retail properties and 26 percent for health care properties.

By investor type, the dollar volume of loans in the fourth quarter compared to the same period in 2011 rose by 228 percent for CMBS, 68 percent for commercial bank portfolio loans, 51 percent for GSEs and 18 percent for life insurance companies.

MBA President & CEO David Stevens

The low-interest-rate environment is driving the demand for relatively higher-yielding commercial real estate loans, and the commercial real estate financing industry cautiously greeted the rapid return of liquidity into the sector during the Mortgage Bankers Association’s (MBA) 2013 Commercial Real Estate Finance/Multifamily Housing Convention & Expo. The exposition opened on Monday with a record attendance level of about 2,600.

“As the year begins, we can see positive momentum,” said Debra W. Still, 2013 MBA chairman, at the opening session. “Commercial and multi-family real estate finance has enjoyed a relative calm amidst the storm.” Still, she noted favorable conditions for both financing and commercial real estate–interest rates are lower than ever before, and yields and cap rates remain attractive relative to those of other investments. “Multi-family markets have arguably never been stronger, and office and retail markets offer plenty of upside.” Still cited, however, challenges to the commercial property sector including the European sovereign crisis and federal deficit, and she referred to the current “artificially low” interest rates.

“You feel good about the business environment, and you should,” said David Stevens, MBA president and CEO, in addressing attendees during the opening session. Stevens said that delinquencies are at the lowest level since 2009, the $2.4 trillion in mortgage outstanding is increasing, and CMBS issuance is expected to grow this year to $65 billion from $45 billion last year. “This really reflects the demand and recovery on the private capital side.” Life insurance companies and banks, meanwhile, are also looking to retain mortgages, he said.

On the other hand, although the low interest rates provide many benefits, Stevens said, capital is struggling to obtain concurrently desirable yield levels and asset quality in the low-yield environment.

One fear among market participants is that debt investors’ bid for the relatively higher returns offered by commercial property could lead to lower underwriting standards and a weakened CMBS sector—all too soon–as lenders compete for the same deals.

Debt investor groups across the board are generally said to be increasing their appetites for commercial loans this year. CMBS and bank financing has returned to the market, while life insurance companies and the GSEs are expected by many industry players to maintain if not increase the dollar amounts of their financings in 2013. Fannie Mae closed 2012 with $33.8 billion in multi-family financings, while Freddie Mac announced $28.8 billion in new multi-family volume for the same year.

A key driver of increased liquidity for the overall commercial property sector has been the recovery in demand among investors for CMBS. “Sustained bond market rally in the second half of 2012 has helped drive down funding costs, enabling CMBS lenders to reduce rates charged to borrowers,” stated Jones Lang LaSalle in a press release.

In the session “The Search for Yield,” moderator E.J. Burke, executive vice president and group head of KeyBank Real Estate Capital, commented that it appears “there is far more capital chasing for a home than there are good deals.”

“A lot of this has come back too quickly. We are concerned about how fast things have moved in terms of risk tolerances,” said Kevin Riordan, president, CEO and director of CreXus Investment Group. “I can’t answer if $100 billion is a normal market [for CMBS financing], but I think we are getting there too quickly.” Riordan also said that the “creep” over time of lenders institutions to the secondary market has already turned into a “herd.”

Life companies are still under-allocated to the multi-family sector in the billions, estimated Brian Casey, managing director and head of real estate debt strategies of MetLife Inc., in responding to a question about how much financing life companies would execute under ideal circumstances.

And Diana Reid, executive vice president of PNC Real Estate, said that banks have resolved their balance sheet issues and become more competitive in multi-family construction financing in the fourth quarter. As a result “there are more lenders looking for the same deals,” she said. Still, pricing, rather than recourse, remains the point of competition.

There were also questions raised about the self-regulation of CMBS and whether B-piece buyers are holding onto the risks rather than selling them. “I do not believe we are at CMBS 2.0,” said Reid, referring to the new, safer regime of CMBS that will prevent a repeat of 2007. Reid noted the Dodd-Frank risk retention regulations are yet to be released.

MBA announced this week that it forecasts commercial multi-family mortgage originations to increase by 11 percent to $254 billion in 2013 from 2012. Commercial and multi-family mortgage originations jumped by 49 percent in the fourth quarter compared to the same quarter in 2012.

By investor type, the dollar volume of loans in the fourth quarter of 2011 compared to the same period in 2011 rose by 228 percent for CMBS, 68 percent for commercial bank portfolio loans, 51 percent for GSEs and 18 percent for life insurance companies. For the entire year, originations in 2012 rose by 24 percent, MBA reported.

JLL said it expects capital availability to drive transaction volume increases of 15 to 20 percent in 2013. “Competition for core product is opening up attractive opportunities for borrowers,” it stated, and that JLL’s capital markets experts are “seeing a variety of aggressive debt structures,” on core products such as debt yields between 8 and 10 percent and DSC ratios of 1.15 to 1.35.

While making possible many deals and rescuing mortgages from default, the extremely low interest rates also introduce another point of concern: refinancing risk in the future when and if interest rates should increase again, and many speakers referred to that risk. Financed at extremely low interest rates, properties may have difficulty finding refinancing if interest rates rise significantly in future, especially if they have not amortized, or property values do not rise, adequately.

The longer the low interest rates persist, the greater the buildup of stress, said Sally Gordon, managing director, Risk and Quantitative Analysis Group, of BlackRock, Gordon presented a general session on portfolio diversification strategy.

The seeming lack of euphoria among lenders despite the return of liquidity could also  be attributed perhaps to the recognition that the abundance of capital, especially that slushing in the CMBS markets, could disappear overnight and be affected by both foreign and domestic developments, as has happened in recent memory. “Liquidity can evaporate faster than you even thought possible,” commented Gordon.

The potential volatility of the capital markets tied in with the life lessons of guest speaker John Bucksbaum, founder of Bucksbaum Retail Properties LLC. Bucksbaum recounted his experiences with the financial crisis in the late-2000s as former CEO of retail giant General Growth Properties (GGP). One of his biggest mistakes, where the GGP bankruptcy was concerned, was to allow mortgage maturities to compress in the same time period, said Bucksbaum. The second mistake, in view of the fact that liquidity could disappear very quickly, was to not raise equity when there was the opportunity, and to wait for higher stock prices before making a stock offering for the public company. “You don’t always know when you can raise equity. The day may come when “you need equity, and you don’t have it,” said Bucksbaum.

And as Gordon said, once liquidity dries up, it may be too late to mitigate the risk.

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CPE:  What are the biggest changes you expect from corporations relative to their CRE strategies in 2013?

Kishan:  In short, changes in structure, location, process and strategy to drive bottom line impact. This will mean changes in CRE organizations, their suppliers, technology and outsourcing choices.

CPE: What are CFOs’ priorities as we emerge from the recession, and how is this impacting their CRE strategies?

Kishan: CFOs want cost but have greater awareness of the need to balance against operational risk, realistic timelines and growth. In particular, reduction of waste, streamlined processes & making tough business decisions on big CRE deals. We will see more centralized CRE orgs, a premium on talent and CRE leaders who can drive flawless execution.

CPE: How much will that change the CRE orgs?

Kishan:  A lot: rebalancing of global vs. local decision, bolder CRE roles with higher talent and more non-core outsourcing.

CPE:  So how far out do CFOs want to plan for RE needs? Are they planning more for the short, medium or long term?

Kishan:  Real strong focus on x-divisional plans to avert downside risks and stranded costs (on a) 2-4 year horizon; varies by region.

CPE: What are their biggest challenges as it relates to their real estate?

Kishan: Transform the workplace, drive RE plans x-divisionally, consolidate, jettison non-operating surplus, reposition CRE.

CPE: What new responsibilities are corporations seeking from their service providers? 

Kishan:  Joint financial management, broader PM capability, more share of peripheral services, innovation, more ops control, more seamless services, third-generation solutions.

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The downtown Exxon Mobil building recently traded hands, with San Francisco-based Shorenstein Properties becoming its new owner.  Shorenstein purchased the property for Shorenstein Realty Investors Ten L.P., a fund formed in 2010 with $1.2 billion in committed capital.

Along with the sale, former owner Exxon Mobil Corp. also leased back the entire building into 2015, when it plans to relocate to its new 385-acre corporate campus, currently under construction north of Houston.

The 45-story 800 Bell St. building, known as the Exxon Mobil Tower, was built in 1962 as the headquarters of Humble Oil & Refining Co., a predecessor to ExxonMobil; at that time, the 1.2 million-square-foot office tower was the tallest building west of the Mississippi River at 606 feet.

Also included in the sale was a seven-story parking garage. No financial details of the transaction have been disclosed, but Shorenstein Properties chairman & CEO Douglas Shorenstein declared, “We purchased this property markedly below current replacement cost, which gives us the opportunity, once the current user vacates, to employ all our company’s core skills – in capital transaction execution, redevelopment, leasing and operations – to increase the property’s value by establishing its long-term position and further enhancing its reputation in the market.”

According to an official release, Shorenstein plans to undertake significant improvements to the property after ExxonMobil’s departure.

The Hilton Houston Westchase also experienced a recent change of owners, as Interstate Hotels & Resorts sold the 297-room hotel to Wheelock Street Capital. This is the company’s second Houston purchase and its sixth full-service hotel acquired within the past 12 months. Wheelock Street plans to renovate the 12-story, 220,254-square-foot hospitality property at 9999 Westheimer Road.

No details have been provided as to the amount for which the Hilton Houston Westchase traded, but CoStar Group Inc. reports that investment entity Capstar Westchase Partners L.P. sold the asset to Interstate Hotels in February 2007 for $50.5 million, or $170,034 per key.

Image courtesy of Obskura via Flickr