The Heritage Plaza acquisition increases Brookfield’s Houston presence by 13%, making the New York City-based REIT the largest office owner in downtown Houston. Prior to the acquisition, the company owned nine buildings totaling nearly 9.2 million square feet in the CBD including: One, Two and Three Allen Center, 1400 Smith and KBR Tower. The portfolio was 96.1% occupied as of Sept. 30.

“Heritage Plaza is a perfect fit for our portfolio,” Layne tells GlobeSt.com, adding that the acquisition suits Brookfield’s strategy of owning and operating the best-quality assets in its core markets. “It’s a true AA quality trophy asset.”

At closing, Heritage Plaza was 84% occupied. Lead tenants include Deloitte, EOG Resources and Tudor Pickering Holt & Co.

Layne says he’s been eyeing Heritage Plaza for nearly five years. When Heritage Plaza came on the market in 2005, the timing wasn’t right for Brookfield to acquire it, he recalls. In fact, Brookfield was in the midst of acquiring Trizec Properties Inc. at the time. Moreover, Trizec was trying to close the sale of 1400 Smith.

Goddard bought the landmark property in July 2005 from a state pension fund for $128 million. The Atlanta-based firm completed extensive building renovations and upgrades including a new food court and fitness center. Moreover, the firm constructed a 10-story parking garage with a tunnel and a skybridge that connects to one of Brookfield’s properties.

When Goddard acquired Heritage Plaza, the property served as the corporate headquarters for Chevron Texaco and the occupancy was in the high 90% range, according to Bill Deyo, a principal with Goddard.

“Almost overnight, the building’s occupancy fell to the low 30% range when Chevron decided to buy one of the Enron towers,” he recalls. “We worked hard to lease it back up, and our ability to get it to 84% occupancy speaks to the strength of the Houston market, as well as our ability to manage the property.”

Layne says Heritage Plaza offers strong upside through rent appreciation and increased occupancy. “We’re optimistic we can lease the majority of the vacant space in 2011,” he notes. “I think some of the space will be absorbed with existing Heritage Plaza tenants, as well as existing Brookfield tenants that want to expand. We also have a good flow of prospects from downtown and the West Loop. We think we’ll be able to push rents over the next two years.”