Auction of Enron Headquarters to Take Place Tuesday

- Nov. 27--The Enron headquarters that was the backdrop for so many television reports about the company's failure will be auctioned off next week.

The private sale of the 50-story tower at 1400 Smith will be held Tuesday at the Houston offices of its primary bankruptcy law firm, Weil Gotshal & Manges. The high bidder will be expected to finalize the purchase in a few weeks.

The building that used to feature the crooked "E" logo out front wasn't owned by the bankrupt energy company. In a complicated transaction, Enron refinanced its lease with a group of lenders led by J.P. Morgan Chase for $284.5 million in the 1990s. The deal essentially gave Enron cash and the lenders the building. Such financing deals are common among companies seeking to cash in on valuable real estate.

This upcoming sale should offer closure, and quite possibly a large loss, for J.P. Morgan and the other investors.

The distinctive tower has been marketed for several months by Granite Partners. In this weak office market, the Enron building is not expected to draw anywhere near the $102 million paid for the newer Enron tower nearby and could fetch just half that much.

When Enron went bankrupt, it defaulted on the lease, and it is helping to market the building as part of the bankruptcy.

The building up for auction has 1.27 million square feet and was developed in the early 1980s by Century Development.

Enron's remaining 1,200 workers are expected to begin moving out early next year. Most will be consolidated on a few floors of the 4 Houston Center building at 1313 Lamar.

Downtown's office market has been getting weaker recently. The vacancy rate for Class A buildings is 17 percent and is expected to rise as high as 20 percent next year. Two years ago it stood at 2 percent.

The Enron building is tied by a skybridge to the 1500 Louisiana building, a 40-story tower that was built to become the new headquarters of Enron.

But the energy firm filed for bankruptcy before the Louisiana Street building was completed.

The Louisiana Street building was sold for $102 million to Intell Management and Investment. Intell is now calling the building by its address, with no mention of its Enron roots.

Money raised by the auction of the 1400 Smith building will be divided among the lenders that entered into the synthetic lease with Enron, many of whom are also creditors in Enron's bankruptcy.

The crooked "E" logo in front of Enron's headquarters, so popular with TV cameras and tourists, is long since gone. It was removed last year and sold at an auction for $44,000.