Hines sells 2525 West End

Hines, a real estate development and management firm, has sold the 14-story 2525 West End building to a Houston real estate firm. Terms of the Lionstone Group's acquisition were not disclosed. Hines

Email | Print By David A. Fox

01-30-2004 12:00 AM — Hines, a real estate development and management firm, has sold the 14-story 2525 West End building to a Houston real estate firm. Terms of the Lionstone Group's acquisition were not disclosed.

Hines developed and leased up the building to 100% occupancy before selling it. It will continue to act as the leasing/property manager for the 366,000 square-foot facility.

Lionstone was founded in 2001 by Tom Bacon, Glenn Lowenstein and Dan Dubrowski. It was funded initially with a $75 million investment from the Oregon government pension fund, which has since added another $50 million.

NashvillePost.com first reported in May 2003 that Hines was looking to sell its interest in the building, and had approached Vanderbilt University with whom it partnered in 1998 to develop the 600,000-square-foot-plus mixed-use development on roughly seven acres of Vanderbilt-owned land located at the corner of West End Avenue and Natchez Trace. The entire project consisted of the office building and about 65,000 square feet of retail anchored by tenants that include Borders Books and P.F. Chang's. In addition to the land, Vanderbilt owns the adjacent parking garage and a significant stake in the full-service, 305-room Marriott Hotel.

NashvillePost.com estimated then that the property would fetch less on a per-square-foot basis than the Caterpillar Financial Center, which commanded nearly $200 per square foot when Atlanta-based Well Real Estate shelled out roughly $62.5 million to acquire the 312,000-square-foot Class A office property from Raleigh, N.C.-based Highwoods Properties.

In an afternoon telephone call, Dubrowski would not disclose the transaction price resulting from the "competive bid situation." He did say that the building is in an account for the Oregon Public Employees Retirement Fund that is a "permanent vehicle" and that his firm has a "very long time horizon" in its investment strategy.

A local real estate expert said today that a price of $170-per-square-foot would be reasonable for 2525 West End, implying a total transaction price of roughly $62 million. Based on 2001 assessments, property records show the 2525 West End Tower, parking garage and 4.93-acre tract of land appraised for $51.3 million.

Hines also developed the Chattanoogan, a hotel and conference center in Chattanooga.

Paige Orr contributed to this article.