REAL ESTATE – Shorenstein Properties LLC is working on a transaction that involves acquiring all of the Portland, Oregon, office building assets of the former Equity Office Properties Trust (EOP) portfolio.
The properties are now owned by Blackstone Group. The company acquired EOP for $39bn (€29.6bn) this month and the deal with Shorenstein should be closing in the next three weeks.
The Shorenstein deal may have a price tag in excess of $1.1bn, with a total of 17 properties in the transaction totaling 370,000 square metres. Part of the portfolio also includes some land that could be used for future development, and around 55,000 square metres could be constructed in the future.
Most of the properties are suburban office buildings, with two in downtown Portland. The whole portfolio has an occupancy level of 92%.
Most observers in the real estate industry look at the EOP portfolio as a value-added investment play since the assets could be improved through a new leasing and management strategy. Much interest has been evident in the assets because of a lack of portfolios of this size and as there is currently high demand for office leasing space.
Shorenstein will be completing this transaction for its commingled fund, Shorenstein Realty Investors Eight, LP. Should it close, the Portland transaction will be the largest single transaction for the company since it started running commingled funds in 1992.
Shorenstein raised $1.1 bn of equity for Realty Investors Eight and the fund was closed last year. Most of the capital came from foundations and endowments, although Shorenstein put in $100m of its own money as a co-investment.
Blackstone is now selling a good portion of the EOP assets, and industry experts have predicted the amount to be anywhere from 80% to 95% of the entire portfolio. Some other deals are being lined up – one of these is a $6.35bn transaction with Beacon Capital Partners to buy all of the EOP assets in Washington DC and Seattle.