Brookfield Snaps Up 2.9M-SF JPMorgan Chase Office Portfolio in $200M Deal

February 16, 2010
By Barbra Murray, Contributing Editor

Talk about the deal of all deals. Toronto, Ont.-headquartered Brookfield Real Estate Opportunity Fund has just closed the purchase of a 2.9 million-square-foot U.S. office portfolio from New York City-based J.P. Morgan Chase in a quasi sale-leaseback transaction for –according to the Wall Street Journal — $200 million. Brookfield is keeping mum on the specifics, so whether or not the 16 properties involved are distressed, or if the company assumed any debt in the deal has not yet been publicly announced.

The tenant roster for at least four of the properties, accounting for 60 percent of the portfolio square footage, is at maximum capacity. J.P. Morgan will leaseback all office space at four office facilities sited in Columbus, Dallas and Tampa under long-term, triple-net lease agreements. No one is broadcasting the terms of the details, but given the downtrodden state of the office market around the country, J.P. Morgan, just like many other tenants, probably inked a deal with lower-than-usual rates. The average asking rent for Class A office space in Columbus, Dallas-Fort Worth and Tampa is a respective $19.17, $23.85 and $22.31 per-square-foot, according to a fourth quarter 2009 report by real estate services firm Grubb & Ellis.

The remainder of the portfolio spans the U.S. Among those 12 assets are an 800,000-square-foot structure in Houston and a 650,000-square-foot office campus/data center in Whippany, N.J.

Brookfield has done big business with J.P. Morgan in the past. Over the last four years, the fund has snapped up in excess of 100 properties accounting for 12 million square feet of commercial space. However, despite their strong relationship, the 16-market portfolio had been openly marketed; alas, the company had competition, apparently, for the group of assets.

Prime opportunity is what compelled Brookfield to go after the portfolio, which boasts coveted locations and quality buildings. “It’s a combination of both those things, along with the ability to add value to the non-fully leased properties,” senior vice president Steven H. Ganeless told CPE with regard to what attracted the fund to the group of properties.