“These are unique buildings because they are part of the Houston Galleria, which is the number one tourist destination for the city,” says Robert Williamson, a senior managing director with HFF who is leading the marketing efforts. “There are only a handful of big, mixed-use complexes like the Galleria, and the Galleria was a pioneering project when it was built in the 1970s by Hines.”

Because of the size of the deal, Williamson anticipates the properties will appeal to large equity funds, private REITs and institutional investors. Chicago-based Walton Street Capital bought the entire Galleria complex from Hines in 1999. The firm condominiumized the project, which allowed it to sell pieces. It sold the retail portion to Simon Property Group.

“The buildings have been maintained to institutional quality over the years and upgraded so they compete with the best of the class A buildings in the Galleria area,” Williamson says.

Williamson tells GlobeSt. that Walton Street Capital decided to sell the towers because it has reached the end of its holding period. Local players say the firm had hoped to sell the office buildings a few years ago after executing a lease with Stanford Financial Group for 112,000 square feet in Galleria Tower II, but was unable to do so when that 10-year deal fell through.

Walton Street was able to backfill that space by signing a deal with Southern Union Co. for just under 200,000 square feet. The gas company plans to move into Galleria Tower II next year.

In addition to Southern Union, the Galleria Office Towers are leased to Air Liquide, Merrill Lynch, Citigroup Global Markets, UBS, Banco Santander and BBVA Bancomer. The buildings are 90% leased.

“There is upside with these buildings – there is a little more space to lease and the in-place rents are below market by more than 10%,” Williamson says. “As leases roll, there is an opportunity to bring the leases to market.”