Cousins, Myers Sell Pair of Office Buildings for $287M

SAN FRANCISCO-Two local office buildings totaling 763,000 sf have traded hands for $287 million, or $374.65 per sf. Chicago-based Hines Interests’ U.S. Core Office Fund paid $140.6 million for 101 Second St., a 387,000-sf building completed in 1999, and $146.4 million for 55 Second St., a 379,000-sf building completed in 2002. Both buildings are located in the Mission Street Corridor of San Francisco’s South Financial District. The seller was a partnership of publicly traded Cousins Properties of Atlanta and locally based Myers Development that was was represented by CB Richard Ellis. A source at Cousins tells GlobeSt.com that as of June 30, each of the office buildings was 84% leased. KPMG is the largest tenant at 55 Second St. and the largest tenant at 101 Second is the law firm of Thelen, Reid & Priest. Cousins has sold a dozen office buildings so far this year, including six buildings in its home town of Atlanta. And with an oversupply of investment capital compressing cap rates and minimizing value-add opportunities, the company has made no significant acquisitions. “We are a REIT and we do hold properties for the prescribed amount of time, but when the market is offering pricing that we don’t think we will be seeing again for a long period of time, we owe it to our shareholders to capture that value,” the company source tells GlobeSt.com. “We create value through development, so in order for us to buy, there has to be a significant opportunity to add value.”Yesterday, Cousins and its investment partner closed on the sale of more than one million sf of office space in four buildings at Wildwood Office Park in suburban Atlanta for $172.5 million. Earlier this month, a partnership of Cousins Properties and Los Angeles-based Commonwealth Partners sold Buildings III and IV (totaling 358,000 sf) at Austin Research Park in Austin, TX to a private equity fund for $78.7 million, or about $219 per sf. In early August, Cousins sold the Pinnacle and Two Live Oak, two Atlanta properties totaling about 700,000 sf, to TIAA-CREF for $200 million. In late July, the Cousins sold 101 Independence Center, a 20-story, 526,000-sf office building in Downtown Charlotte, NC, to American Financial Realty Trust for $100 million. And in May, Cousins sold 333 John Carlyle and 1900 Duke St., both in Alexandria, VA to Grosvenor USA Limited for $80 million. Hines’ U.S. Core Office Fund is a partnership of Hines and Sumitomo Life Realty (N.Y.) Inc., a wholly owned subsidiary of Sumitomo Life, the third largest insurance company in Japan. The fund was formed to acquire a portfolio of class A, geographically diverse core office buildings in the U.S. Earlier this year, the fund acquired an interest in 600 Lexington in New York; and One and Two Shell Plazas in Houston. In 2003, the fund acquired interests in 499 Park Avenue and 425 Lexington in New York, and 1200 19th Street NW in Washington, DC.