Pulling off a complicated real estate deal – swiftly
As part of its strategic plan, Hewlett-Packard had been looking to sell off pieces of the 5 million square foot former Compaq Computer Corporation world headquarters it inherited when it purchased Compaq. The Houston campus contained roughly 35 buildings bound together by an intricate network of internal roads, sky bridges and a complex, privately-owned common utility system.
HP needed to ensure that a prospective buyer of various clusters of buildings would have adequate utility service and appropriate access to the property without compromising HP’s own ability to operate or sell the rest of the campus. HP also wanted to keep its options open to be able to create a landowner’s co-op to whom it could turn over ownership of and responsibility for the roads and the common utility network in the future after portions of the campus were sold off.
When the opportunity arose to sell 1.2 million square feet of buildings to the Lone Star College System, HP was keen to complete the transaction within less than a month, before the end of the fiscal quarter.
To sort out this complicated transaction, HP turned to Sherin and Lodgen attorney Peter Friedenberg, who oversaw a diverse team of engineers, surveyors, utility consultants, title insurers, and local counsel. Each was assigned their role in working out the large number of details.
Working against a deadline that even HP felt was likely unattainable, Friedenberg and his team at Sherin and Lodgen negotiated the terms of the sale to Lone Star and drafted a 200 page cross-easement agreement dealing with 11 separate building services, as well as supply agreements for chilled water service and a new set of architectural and use restrictions.
With the assistance of local regulatory counsel, he also negotiated agreements for the continued supply of high-voltage electricity through the privately-owned electrical transmission and distribution facilities to the buildings being sold so as to ensure that HP remained in compliance with the requirements of Texas’ electricity deregulation statute.
Throughout the negotiations and closing, senior HP executives demanded daily progress updates and assessments of the probability of meeting the closing schedule.
HP closed the sale to Lone Star right on time. The deal was highly beneficial to both parties. Lone Star received a very large amount of space that could be readily turned into classrooms and laboratories with few modifications. HP sold a large chunk of its campus for a good price in one of the largest real estate transactions to occur in the Houston area and during one of the least favorable real estate markets in living memory.