SAN MATEO, CA-Hines REIT of Houston has closed on its acquisition of California Casualty Plaza, a two-building 253,377-sf office complex here for which it paid $60.1 million including closing costs. Two-thirds of the office space, or 166,576 sf, is leased by California Casualty Management Co., a privately held provider of home and automobile insurance. Vacancy in the complex is 16%. The seller was the State Teachers Retirement System of Ohio.California Casualty Plaza includes one four-story building constructed in 1971 and substantially renovated in 1996, and one two-story building constructed in 1983. The property addresses are 1900 Alameda de las Pulgas and 2000 Alameda de las Pulgas. The tenants’ average annual lease rate for space in the building in 2004 was $33.12 per sf, down from $38.45 in 2002, according to SEC documents.As for lease terms, 66,873 sf of California Casualty Management’s lease expires in December 2005, according to the documents. The remaining 99,703 sf expires in May 2018 but may be renewed in five-year increments up to four times. No other tenant leases more than 10% of the building and no other leases expire until 2007 and 2008, when 8.8% (22,289 sf) and 4.5% (11,529 sf) of the building rolls, respectivelyThe acquisition was funded with a $60-million, 90-day term loan from Key Bank National, according to the documents. The loan agreement allows for borrowing at a variable rate or a Libor-based rate plus a spread. The rate is currently 5.82%. Hines REIT has unconditionally guaranteed payment.Hines REIT has hired its sponsor Hines to provide property management and leasing services related to the asset. Under the 10-year agreement, Hines REIT will pay Hines a management fee equal to 2.5% of the annual gross revenues received from the property. The REIT also will pay Hines a leasing fee of 1.5% of gross revenues payable over the term of each executed lease including “any lease renewal, extension, expansion or similar event and certain construction management and re-development construction management fees, in the event Hines renders such services,” according to the SEC documents. In addition, Hines REIT also “generally will be required” to reimburse Hines for its operating costs of providing its management and leasing services, according to the documents.California Casualty Plaza is the first direct asset acquired by Hines REIT. Hines REIT executives could not be reached Tuesday for comment. Hines REIT president Charles Hazen says in a prepared statement that the buildings were an excellent buy because they have a high quality rent roll, convenient access to the major freeways and amazing views due to being next to the Peninsula Golf & Country Club.Hines REIT commenced operations in November 2004 and primarily invests in office properties located in the US. In addition to owning California Casualty Plaza, Hines REIT has acquired indirect interests in nine office properties located in New York, Washington DC, Houston, Chicago and San Francisco.