(By Balaseshan) Thomas Properties Group Inc. (NASDAQ:TPGI) and California State Teachers' Retirement System (CalSTRS) have jointly purchased stake in eight Austin, Texas-area office buildings for $859 million before prorations and adjustments.
The portfolio, which is an eight-building, three million-square-foot office properties, was purchased from TPG-Austin Portfolio Syndication Partners, a venture among Lehman Brothers Holdings Inc., an offshore sovereign wealth fund and TPG/CalSTRS LLC.
Thomas Properties Group and CalSTRS have formed a new venture, known as TPG/CalSTRS Austin LLC, to own the Austin portfolio. Thomas Properties' unit is the managing member with a 50% interest and CalSTRS owns the balance 50% interest.
Concurrently, an affiliate of Madison International Realty has agreed to buy a one-third interest in Thomas Properties' unit that owns the interest in TPG/CalSTRS Austin LLC. Thomas Properties is the managing member of the subsidiary and will act on its behalf as the manager of TPG/CalSTRS Austin LLC.
As part of the purchase price, TPG/CalSTRS Austin assumed five existing first mortgage loans totaling $626 million. The transaction cut the existing leverage on the portfolio by repaying about $200 million owed to Lehman Commercial Paper Inc.
Thomas Properties retains all operating responsibilities for the properties and the existing Austin leasing and management team will remain in place.
The Austin portfolio includes five downtown Austin properties known as Frost Bank Tower, 300 West 6th Street, One American Center, San Jacinto Center and One Congress Plaza, as well as three suburban properties known as Westech 360, Park Centre and Great Hills Plaza in Northwest Austin.
Separately, Thomas Properties Group also owns Four Points Centre in Far Northwest Austin and operates downtown's 816 Congress and Austin Center for owner Lehman Brothers Holdings Inc.
TPGI is trading down 1.35% at $5.85 on Wednesday. The stock has been trading between $1.88 and $6.15 for the past 52 weeks.