Principal Real Estate buys Houston office building

The Iowa-based real estate arm of Principal Global Investors has purchased 2000 St. James Place on behalf of a consortium of South Korean investors.

Principal Real Estate Investors has acquired 2000 St. James Place, a 335,000-square-foot office building in Houston, on behalf of a separate account for a consortium of South Korean investors consisting of the Korean Federation of Community Credit Cooperatives (KFCCC), the Korea Scientists and Engineers Mutual-Aid Association and Simone Investment.

The asset, which is fully leased by oil and natural gas services company Weatherford International, was purchased from real estate investment and development firm CORE Real Estate for $95.75 million, according to Real Capital Analytics.

The transaction represents the South Korean investor group’s first investment in the Houston market. “It shows the depth of interest in Houston,” said Mark Hanrahan, managing director at Principal Real Estate, in a statement. “Houston continues to be one of our favored markets across all product types and risk profiles.”

Indeed, Houston ranked as one of the top five global cities for foreign real estate investment, fuelled in part by the job growth in the local energy sector, according to a recent survey from the Association of Foreign Investors in Real Estate.

Some of the investors in the consortium have invested in other US markets. KFCCC, for example, was part of a different South Korean consortium that acquired 333 Market Street in San Francisco in 2010 and First National Plaza in Chicago in 2011 in a joint venture with Downtown Properties, the Los Angeles-based investment firm of Goodwin Gaw. That venture sold the San Francisco property to Wells REIT II for $395.3 million in December, according to RCA.

Des Moines, Iowa-based Principal Real Estate, which currently has $42.7 billion in commercial real estate assets under management, is the dedicated real estate group of Principal Global Investors, which itself is the asset management arm of Principal Financial Group.