Cousins to Buy 2-Property Office Portfolio for $1B

Cousins Properties Inc. just struck a deal that will alter its standing in the real estate community. The REIT has entered into an agreement to shell out $1.1 billion in cash for the acquisition of two premier Texas office assets totaling 5.5 million square feet from Crescent Real Estate Holdings.
Greenway Plaza

Greenway Plaza, Houston

Cousins Properties Inc. just struck a deal that will alter its standing in the real estate community. The REIT has entered into an agreement to shell out $1.1 billion in cash for the acquisition of two premier Texas office assets totaling 5.5 million square feet from Crescent Real Estate Holdings L.L.C. It’s a transaction that will garner Atlanta-based Cousins the distinction of being the largest public office REIT in Texas in terms of square footage.

The deal will swell Cousins’ presence in the Lone Star State with the addition of the 4.4 million-square-foot Greenway Plaza in Houston, and the 980,000-square-foot 777 Main St. in Fort Worth, to its portfolio.

Greenway Plaza is a 10-building campus sited between Houston’s central business district and the Galleria submarket. The property is 92 percent occupied and features a host of tenants that reflect the strength of the city as a leading energy market. Among the businesses that call Greenway Plaza home are offshore drilling services provider Transocean Ltd., ExxonMobil, CPL Retail Energy and Occidental Oil & Gas Corp., which occupies more than 725,000 square feet in various buildings, including Three and Five Greenway Plaza, where the company renewed its lease in March of this year. Cousins will pay $950 million for the asset.

With a 72 percent projected year-end occupancy, 777 Main St. may not be as well leased as Greenway Plaza, but it does have a few big names on the tenant roster, XTO (ExxonMobil) and Jacobs Engineering among them. The 40-story tower in Fort Worth’s central business district first opened its doors in 1982 and carries a price tag of $160 million.

It’s not every real estate company that can get its hands on $1 billion in cash for a major asset acquisition, but Cousins can. The REIT will fund what it refers to as the Texas Acquisition with proceeds from an equity issuance, funds drawn under a new $950 million term loan through JPMorgan Chase Bank N.A. and Bank of America N.A. and cash on hand from the anticipated disposition of non-core assets. The purchase of Greenway Plaza and 777 Main from Crescent is on track to close by mid-September of this year.

Cousins acquires Class A offices buildings in leading cities in the Sunbelt region, with a special eye on assets in Georgia, North Carolina and Texas. In terms of specific locations of interest this year, Cousins told Commercial Property Executive, “As for markets, we like Atlanta, Dallas, Houston and Austin.”