Finance  ·  CMBS

Barclays, Citigroup Originate $470M Refi on 2 Brookfield Office Towers in Houston


Brookfield (BN) Properties has secured $470 million in debt to refinance two massive office towers within its multi-property complex called Allen Center in Downtown Houston, according to information from S&P Global Ratings. Brookfield only recently wrapped up the final phase of a large-scale, multi-year renovation of the assemblage. 

Barclays (BCS) and Citigroup (C) originated and sold the two-year, interest-only and floating-rate, commercial mortgage-backed securities (CMBS) loan, which included three one-year extensions options. The expected closing date is March 24, per S&P.

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This financing is backed by Brookfield’s fee interest in One Allen Center and Three Allen Center, two of three main, Class A office high-rises that comprise the Allen Center complex, as well as an adjacent six-story, 2,273-space parking structure and a 154,800-square-foot health club called Downtown Club at the Met that is situated at the top of the parking garage. Together, One and Three Allen Center total nearly 2.2 million square feet of space. 

The third office tower within the Allen Center mixed-use assemblage is Two Allen Center, which is not included as part of this fresh CMBS financing, and the site also includes the C. Baldwin Hotel, a four-star hotel with 354 rooms, and a second parking garage.

Brookfield is one of the largest office landlords in Downtown Houston, controlling a whopping 10.7 million square feet of space, according to S&P. The colossal, global asset manager picked up the three Allen Center office towers in 2006 via its purchase of Trizec Properties, and it injected almost $230 million in equity into the complex between 2014 and 2020. 

Several years ago, Brookfield began a two-phase plan to deploy almost $65 million into renovating the complex. Phase I was a transformation of One and Three Allen Center, which included a revamped two-story lobby and the additions of one-acre of green space at the epicenter of the three office towers, as well as a skybridge that connected One and Two Allen Center. Also included among a number of other improvements was a second sky bridge connecting Two and Three Allen Center and a renovation of the first two floors of Three Allen Center. One Allen Center also got a new, 400-person conference room. 

Phase I wrapped up in the fall 2017, and a couple years later, the firm launched the C. Baldwin Hotel in place of an existing DoubleTree Hotel ,and also welcomed celebrity chef Troy Guard’s Guard and Grace steakhouse into 15,000 square feet of space at One Allen Center. The remaining $83 million for Phase I went toward tenant improvements and leasing commissions, per S&P. 

Phase II, which began in the spring 2019 and focused work on Two and Three Allen Center, wrapped earlier this month, Brookfield announced. Two Allen Center got new retail boxes, as well as a new, two-story lobby and a second-floor outdoor terrace that overlooks the one acre of green space that was added in the middle of the three developments. Three Allen Center’s lobby was also renovated and new amenities were added for tenants, including a bike storage room, a wellness room, and also a suite of 10 private rooms reserved for nursing mothers. Brookfield also put other work into the two buildings, including upgrading the light fixtures and elevators.

Brookfield tapped local contractor Tellepsen Builders, as well as architecture firms Morrison Dilworth + Walls and PDR Corp. for the project. 

While the real estate industry continues to question the future of office after the pandemic, Brookfield’s been busy revamping its office complexes in Downtown Houston, having also completed work on its massive, 4.2 million-square-foot Houston Center campus at the start of this year. It also completed work on Total Plaza at 1201 Louisiana Street last year and is currently working on Heritage Plaza at 1111 Bagby Street