Lionstone Assets Shift to DivcoWest, Market briefs

In Austin, Three Austin properties, including the iconic Frost Tower on Congress Avenue, have been shifted out of the Lionstone Investments asset management portfolio to DivCoWest.

The move demonstrates the deliberate dismantling of Lionstone Investments, the once-prominent Houston-based real estate firm that is going out of business.

Lionstone, founded in 2001, had a significant presence in downtown Houston, in addition to a $5.5 billion national real estate portfolio.

Lionstone’s parent company, Ameriprise Financial, reported in a press release that it has “decided to wind down Lionstone Investments” and “exit this business after a strategic evaluation.”

The remaining properties that are managed by Lionstone will be turned over to new investment managers.

Houston-based Lionstone built an expansive and diverse portfolio with multi-use, office, retail and multifamily properties in 17 cities across the nation. The firm made its mark acquiring and redeveloping a number of historic or unique assets. In 2017, Lionstone was purchased by Columbia Threadneedle Investment, a subsidiary of Ameriprise Financial.

Lionstone Co-Founder and Chairman Dan Dubrowski left Lionstone on Oct. 1. Dubrowski’s pending departure and questions about the future track of Lionstone were first reported in August by Ev Konut Proje.

In Austin, DivcoWest will assume asset management for these three (3) properties that were once part of the Lionstone portfolio and are now controlled by institutional investors.

Frost Tower, a 533,000-SF, 33-story Class A office tower, designed by Duda/Paine Architects. The tower, 401 Congress Avenue, has a substantial amount of retail and covers an entire downtown block between Fourth and Fifth Streets.

300 West 6th Street, a modern 454,000-SF, 23-story office tower with LEED Gold designation and large 30,000-SF floor plates;

Plaza Saltillo, a 10-acre multi-use property in East Austin with 153,000-SF of office, 118,000 SF of retail, including Whole Foods and Target stores, and 703 high-end apartment residences.

“We look forward to working closely with our partners in the downtown brokerage community as well as with existing and prospective tenants to deliver a quality 24-hour lifestyle environment for Austinites,” said Gregg Walker, President of DivcoWest Real Estate Asset Management.Founded in 1993 by Stuart Shiff, DivcoWest, a DivCore Capital Company, is a real estate investment firm headquartered in San Francisco.

The Most Recognizable Tower?

The Frost Tower, with its jagged crown, is one of the most recognizable skyscrapers in Austin. Some citizens say the crown resembles an owl.

Fourteen years after construction was completed, the Frost Tower was refinanced with assistance from the old Holliday Fenoglio Fowler capital markets services firm in 2017.

“HFF worked on behalf of the borrower, Lionstone Investments,” the Holliday Fenoglio press release said “to secure the seven-year, floating-rate loan through New York Life Insurance Company.” The loan was for $123.2 million.

“Frost Bank Tower is the most iconic trophy office tower in Austin’s CBD, which is one of the most dynamic markets in the country,” HFF’s Doug Opalka said in 2017. “When you look at the most desirable office addresses in the United States, Congress Avenue in Austin is always amongst a very elite peer set, and that is always led by Frost Tower.”