Fluor Takes Part in Texas Development : 160-Acre, $380-Million Project to Be Built With Trammell Crow

Fluor Corp. said Wednesday that it had entered into a $380-million joint venture with the Trammell Crow Co. to develop 160 acres surrounding Fluor’s engineering center in Sugar Land, Tex.

Dallas-based Trammell Crow, the real estate development firm which last year led a group that bought Fluor’s 162-acre headquarters in Irvine for $340 million, and Fluor will split the Texas project evenly.

The project will consist of phased construction of approximately 1.5 million square feet of office space and 400,000 square feet of retail space--including high-end fashion stores, restaurants and movie theaters--as well as a major hotel and health facility during the next 15 years.

Trammell Crow will be the managing partner, in charge of obtaining financing, site planning and development, leasing and long-term property management.

Fluor will provide one-half of the acreage as its equity interest in the project, and will be paid “market value” for the remaining 80 acres, according to Joe Trimble, Fluor’s senior vice president. Fluor’s Daniel International unit will be chief contractor on the project.

The development deals in both Irvine and Texas were designed to generate income that will be especially welcomed by Fluor, which posted a $633.3-million net loss during fiscal 1985. In both locations, Fluor, an engineering, construction and natural-resources company, has more office space on its hands than it needs because its business has shrunk dramatically in the wake of a worldwide oil, minerals and commodities slump.

In Sugar Land, as in Irvine, Fluor last year sold its office buildings and then leased back what space it required for its own operations. The company sold its 1.2-million-square-foot office and engineering complex in Sugar Land to a syndicate of investors put together by Daniel Realty, a Fluor subsidiary in Birmingham, Ala. Fluor spokesman Rick Maslin said the company sold the Texas complex at book value of $160 million, but retained control over the surrounding undeveloped property.

Maslin said that the Irvine and Sugar Land locations were “the two biggest pieces of property” owned by Fluor. Both properties are in large planned communities.

But there is a fundamental difference between the Irvine and Texas transactions, officials of both companies pointed out. The Irvine transaction was for Fluor’s immediate profit, with Trammell Crow and its partner, Winthrop Financial Associates, paying Fluor $340 million in cash for its headquarters site and Fluor retaining only a 7% equity interest in future development. By contrast, Fluor has taken a 50% equity position in the Texas deal, with a goal of greater long-term profits.