Shares of Houston-based Occidental Petroleum (OXY) - Get Report firmed Tuesday after news that it sold 2.7 million square feet of office space it owns in and outside Houston to real estate company Howard Hughes (HHC) - Get Report for $565 million.
Shares of Howard Hughes were little changed.
The real estate firm is getting two office towers in The Woodlands, a master planned community about 30 miles from Houston, with 1.4 million square feet of Class A office space. The two buildings were formerly the headquarters of Anadarko Petroleum, which Occidental purchased in August.
Howard Hughes also receives a 125,000 square-foot warehouse and 9 acres of developable land in The Woodlands as part of the deal.
Occidental will lease back all of the larger 808,000-square foot tower and all of the warehouse for 13 years.
Howard Hughes also obtains a 17-building campus in Houston’s Energy Corridor with 1.3 million square feet of Class A office space, all of which is unleased, according to the Houston Business Journal. Oil company ConocoPhillips was formerly housed on the 63-acre campus.
Occidental is dumping real estate assets to trim its debt in the wake of its $55 billion purchase of Anadarko. Occidental took over Anadarko’s debt.
"The sale of office complexes in the Houston Energy Corridor and The Woodlands is part of our plan to divest non-core assets and continue to improve the strength of our balance sheet,” Occidental CEO Vicki Hollub said in a statement. "It was important to us, and many of our employees, to maintain a presence in The Woodlands.”
Occidental bought the Energy Corridor campus earlier this year, but didn’t move there. Occidental CFO Cedric Burgher said after the Anadarko deal that the campus wasn’t big enough and would be unloaded, the Houston Business Journal reports.
Occidental shares traded at $40.87 last check, up 0.41%. Howard Hughes stock was at $126.39, down 0.09%.