Houston Center Complex: Lender Takes Ownership of

In Houston, An entity led by an Australian lender that financed Brookfield Properties’ purchase of Houston Center, a four-skyscraper complex in downtown, has now purchased ownership of the downtown property.

Brookfield Properties, which spent well in excess of $100 million to improve Houston Center since acquiring the 4.6-million skyscraper collection in 2017, no longer has ownership in Houston Center. Occupancy dropped sharply in Houston Center following large corporate departures.

AustralianSuper, one of the world’s largest pension funds, provided $219 million in mezzanine financing to Brookfield Properties to buy Houston Center about eight years ago, as stated by a Bisnow report. People in the real estate community have confirmed the report.

But locating new funding to refinance existing debt has been exceptionally difficult in recent years, putting pressure on office tower landlords around the nation.

In a press release, it was reported a new joint venture led by AustralianSuper with Texas-based Stream Realty Partners completed the “ownership transfer.”

Valuations of office properties have declined significantly for older office towers in the post-Covid era. But spokespeople for Stream Realty declined to disclose the value of the deal or the size of the sliver that Stream owns in the Houston Center joint venture through Stream’s Value Preservation Advisors team.

The skyscrapers in Houston Center are located at 1221 McKinney, 909 Fannin, 1301 McKinney, and 1331 Lamar. The 2 Houston Center building on Fannin had received a particularly heavy-duty renovation.

Brookfield Properties had also embarked on major redo of the Park Shops, the retail portion of Houston Center and renamed it The Highlight. The indoor Puttshack, 1200 McKinney, a new mini-golf course with a bar and restaurant, has been popular with young adults.

Stream will oversee the asset management, leasing, property management, and construction management for Houston Center.

Houston Center sustained two exceptionally heavy blows, the departure of LyondellBasell and the Norton Rose Fulbright law firm. Those two companies combined created about 700,000 SF of vacancy.

Houston Center now is able to accommodate a sizable corporate relocation, a goal for Stream’s leasing efforts, said Stream’s Matt Asvestas, who will lead the leasing efforts for Houston Center.

“We believe in the long-term growth of downtown,” Asvestas said.

Houston ranks No. 1 among 10 top U.S. metros in employee return to office, Downtown Houston+ recently reported. In the wake of the work-from-home practices that emerged during Covid, high quality office properties fared better in luring employees to return to the office.

At Houston Center, Stream’s Managing Director of National Office Investor Services Adam Showalter will oversee “the execution of the campus’ hospitality-infused property management experience,” Stream said.

“Houston Center represents a transformational opportunity in a market where we have strong conviction in the long-term fundamentals and future growth,” said Kyle Valentine, Executive Managing Director & Partner at Stream.