Chesapeake Plaza is sold, will be renamed Pier 1 Imports Building
08/12/2014 9:32 AM
08/12/2014 9:41 AM
Pier 1 Imports will get its name back on the office tower it built as a headquarters a decade ago following the building’s sale by Chesapeake Energy to Houston-based Hines.
The Dallas office of Hines, one of the largest real estate firms in the world, late Monday closed its deal to buy Chesapeake Plaza, the 20-story glass-and-steel office tower on the western edge of downtown Fort Worth. News of the impending sale was first reported by the Star-Telegram last week.
Pier 1, which is the building’s only other tenant, will expand its headquarters lease and take over 18 floors, or more than 313,000 square feet of space. Oklahoma City-based Chesapeake, which has been trimming its Barnett Shale operation in recent years, will consolidate its employees and offices to the building’s top floor.
The office tower is being renamed the Pier 1 Imports Building to recognize the home furnishings retailer’s long-term commitment to the property, Hines said. Terms of the deal were not disclosed. The building’s name change takes effect immediately.
“I’m very pleased to add this iconic building to the investment portfolio of Hines U.S. Office Value Added Venture III,” David Congdon, Hines senior managing director, said in a statement. “We are bullish on Fort Worth’s steadily growing economy and believe Hines’ management team will add considerable value to this investment and Pier 1 Import’s occupancy.”
Alex Smith, Pier 1’s president and chief executive officer, said in a statement: “We are delighted about this new affiliation with Hines and look forward to a long partnership. Pier 1 Imports has been associated with Fort Worth for more than 50 years, and our associates are committed to our community. We are pleased that this deal helps to ensure our well-loved company will remain in Fort Worth for many years to come."
Smith was out of the office Tuesday and not available for further comment.
Company spokesperson Jennifer Engstrand said Pier 1 was already occupying 16 floors at the time of the sale and will add two more. Pier 1 will have the right to occupy the remaining two floors, the 19th and 20th, “at some point in the future,” she said.
Also prior to the sale, Pier 1 had extended its lease through 2022, and has now extended it through 2027, she said.
“We are pleased that this deal helps to ensure that we will remain in Fort Worth for many years to come,” Engstrand said.
Chesapeake, struggling to reduce a large debt load after the collapse of natural gas prices, had been looking to sell the building for more than two years.
“Through this sale, Chesapeake continues its strategy of divesting non-core assets to optimize operational efficiency and focus on our business of energy exploration and production,” said Chesapeake spokesman Gordon Pennoyer.
The office tower becomes Hines’ first Fort Worth property in decades. It owns several Dallas office buildings and is behind The Carillon, a 285-acre commercial and residential development along Texas 114 and Carroll Avenue in Southlake that will include 400 single-family homes and 900,000 square feet of office, retail and hotel space.
The building, which sits on nearly 15 acres along the banks of the Trinity River, is listed on the Tarrant Appraisal District tax rolls for $68.8 million.
Chesapeake’s name was removed from a monument sign in front of the building last week, and the company flags came down Monday.
Chesapeake bought the building, at 100 Energy Way, from Pier 1 Imports for $104 million in 2008, renaming it Chesapeake Plaza. Pier 1 built the 460,000-square-foot office tower that opened in 2004, spending $90 million for the land and construction. Its original address was 100 Pier 1 Place.
At one time, Chesapeake had about 400 employees working from the top half of the building. But in recent years, the company has scaled back and sold numerous Barnett Shale properties.
Last year, it sold 27 acres to Dallas-based developer Centergy Retail just off the bustling West Seventh Street corridor, which plans a hotel, apartments, shops and offices called the Left Bank. Chesapeake acquired that land in 2007 and 2008 but never did anything with it.
Chesapeake also has been selling commercial properties near its Oklahoma City headquarters.
In April, it sold four office buildings totaling 230,000 square feet to MidFirst Bank.
In February, it sold three open-air shopping centers — Nichols Hills Plaza, Classen Curve and the Triangle @ Classen Curve — totaling 290,000 square feet, as well as an additional 12 acres to a joint venture of Ohio-based Glimcher Realty Trust and Oklahoma City-based Blanton Property Co. for $51.8 million.
And in November 2013, it sold three office buildings to Love’s Travel Stops and Country Stores for $24.2 million.
Pier 1, meanwhile, has been in the midst of a turnaround. The company sold the building at a low point in the economy, just before the nationwide housing meltdown. The company was losing money, and its stock came close to being delisted from the New York Stock Exchange, bottoming out at 10 cents a share in early 2009.
But its business has bounced back in recent years. In 2013, the company recorded profits of $107.5 million as sales inceased by 4 percent. The company’s shares (ticker: PIR) closed Tuesday at $15.31, down 38 cents for the day.
Some of its increased profits in recent years have come since the home decor company re-introduced its e-commerce business. In the most recent quarter, its sales were up 6.1 percent, led by a surge of online sales, and the company said it expects 20 percent of its sales to eventually come online.
Hines currently owns six office and residential towers in Dallas, including the iconic Galleria, a mixed-used development on 45 acres at the northeast corner of LBJ Freeway and the Dallas Parkway. Hines has also developed three other office towers, including Galleria North, Two Galleria Tower and Three Galleria Tower.
Hines developed One Victory Park, a 17-story office building in Dallas’s trendy Victory Park project near the American Airlines Center, where it is also poised to start construction in the fourth quarter on a 23-story office building at 2371 Victory Ave. It is slated to be done in early 2017.
It also owns Chase Tower, a 55-story, 1.2 million-square-foot office tower at 2200 Ross Ave. in downtown Dallas, and the 11-story Citymark Building in Dallas’ Uptown market near the toney Crescent Hotel.
Hines is a privately held real estate firm involved in investment, development and property management worldwide. Its historical and current portfolio includes 1,317 properties totaling more than 541 million square feet of office, residential, mixed-use, industrial, hotel, medical and sports facilities, master-planned communities and land developments, according to its website.
It has offices in 115 cities in 18 countries, and controlled assets valued at about $28.2 billion.
The 40-story office tower at 777 Main St. was the last office building to sell in downtown Fort Worth. That was sold a year ago by Fort Worth-based Crescent Real Estate Holdings to Atlanta-based Cousins Properties.
The central business district has a current vacancy rate of 17.2 percent in its Class A buildings, according to market reports. Sales prices of Class A buildings in the past year have been about $170 per square foot, the report said.
Todd Burnette and Pat McDowell with the Fort Worth office of Jones Lang LaSalle represented Pier 1 in its lease negotiations.
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