515-foot high-rise nets record amount at $188 million


The centerpiece of Austin's skyline will be under new management by mid-September as a result of a record-setting deal for more than $354 per square foot, a total of $188 million, signed Thursday.

The Frost Bank Tower will be acquired by the Chicago-based Equity Office Properties Trust, the nation's largest publicly owned office building manager. The contract was signed by the current owner, Atlanta-based Cousins Property Inc.

Ground was broken for the tower, a 33-story, 515-foot-tall high-rise office building in late 2001 during a huge economic pitfall and was the first skyscraper in the country to begin construction after the Sept. 11 attacks.

"We felt very secure in the bottom line of the Austin economy and especially secure in the economy of the downtown district," said Tim Hendricks, Cousins' senior vice president for office development in Texas, of starting such a large-scale project during a fiscal downturn. "It was a calculated risk, but our mission is to create shareholder value, and we wouldn't do anything if we thought we would lose money."

This move may come as a surprise to Cousins' shareholders, as the 2-year-old building was expected to stay with the company for the next decade.

"Cousins' intention was not to sell the property for at least 10 years," Hendricks said. "We decided that this was the best time to harvest a return on our investment."

While Cousins declined to comment on the actual profit of the deal, Hendricks said that the deal for the more than 525,000-square-foot tower was a "substantial return that exceeded original estimates and is a record purchase in both Austin and Texas."

Hendricks cites "very aggressive capitalists" who are pouring money into real-estate opportunities at record levels nationwide as the motivation for such an early sale. "The number of dollars that are chasing investment opportunities are at all-time record highs."

While Hendricks expects the deal to be finalized in the next 30 to 40 days, he said Cousins will still manage the building into 2008 to look after tenant welfare.