Hanover Real Estate Partners sells Marathon Oil Tower
Connecticut-based Hanover Real Estate Partners has sold Marathon Oil Tower, in Houston, Texas to CBRE Strategic Partners US Value 6, a fund sponsored by CBRE Global Investors.
Terms of the transaction have not been disclosed.
Reed Miller and Ken Boyle, Managing Partners for Hanover Real Estate Partners, says: “We sought an opportune time to sell this truly unique trophy asset and believe this attractive transaction makes sense for both parties. We enjoyed working with CBRE Global Investors to consummate this sale and are pleased to come to an agreement that creates immediate value for our investors.”
Located at 5555 San Felipe Street in Houston’s Galleria submarket, the 41-story, Class-A property contains 1.2 million square feet of premier office space, above standard finishes and an attached granite-clad, 13-level parking garage. Marathon Oil Tower is generally regarded as one of the finest office buildings in Houston. The property is ideally situated in proximity to some of the City’s premier residential neighbourhoods and directly adjacent to the prestigious Post Oak Boulevard corridor.
Hanover took over responsibility for the management and oversight of the property from Lehman Brothers Inc. in 2003. At that time, the property was 100 percent leased to Marathon Oil Company (Marathon) under a lease that expired in December 2006. In July 2004, Marathon had indicated a desire to reduce its overall square footage and began considering options for the relocation of its headquarters’ facility. Hanover immediately set about addressing Marathon’s space needs to ensure the company remained at the property. Hanover successfully negotiated a new 15-year lease with Marathon for approximately 650,000 rentable square feet or 60 percent of the total building. Hanover then implemented an aggressive leasing strategy to fill the space vacated by Marathon.
To help lease up the property, Hanover made significant capital improvements to the building, including renovating the lobbies, improving the building’s mechanical systems and making significant structural improvements. Hanover also realised significant cost savings by improving the building’s energy efficiency and achieved LEED Silver status. Hanover’s capital commitments and marketing efforts helped it secure long-term leases with a number of creditworthy tenants. The building is currently home to businesses from a wide range of industries, including insurance giant Aon Corporation, Houston-based wealth management firm Kanaly Trust Company, and engineering giant Baker Hughes Oilfield Operations Inc., among others. Marathon Oil Tower’s strong tenant base coupled with the strength of the Houston market made it an attractive acquisition prospect.