The auction was staged yesterday in the Downtown offices of Enron's law firm, Weil, Gotschal & Manges LLP. The sale also is contingent upon approval from US Bankruptcy Court for the Southern District of New York.
John Dillman of Linebarger, Goggan, Blair, Pena & Sampson in Houston tells GlobeSt.com that the objection emanated from Enron's failure to pay a $3-million tax bill from the $102-million sale of Enron Center South at 1500 Louisiana St., bought at auction last year by Intell Management & Investment Co. of New York City. Since then, interest and penalties swelled the bill to $4 million, says Dillman. The taxes are owed to the city, county, Houston Independent School District and Downtown Management District.
Dillman says Enron's lawyers and tax accountants have pointed fingers at each other over the unpaid tax bill. Even though the headquarters building at 1400 Smith St. is current on its taxes, the objection was filed and will be withdrawn if the bill is paid, Dillman says.
Yesterday's sale was couched in secrecy, but two expected contenders, Trizec Properties Inc. of Chicago and Boca Raton, FL-based Koger Equity Inc., didn't show up to bid. Trizec holds an important card: it provides parking for the 50-story Enron building at its neighboring Allen Center complex. A Trizec spokesman says the parking lease has 10 to 15 years left on the term.
Richard Rudd with Granite Partners in Houston headed up the Enron sale, but he didn't return telephone calls by publication time about the auction outcome or confirm that the winner was in fact a private local investor. For previous story, click here.
Office market watchers have predicted that the CBD vacancy would spike to 21% from 17% if the building is brought to the leasing market, says Sanford Criner, executive vice president with Trione & Gordon/CBRE. Should that occur, the impact will be softened considerably because it's been anticipated for so long, he adds.
"Everyone has known about this for the past two years," says Robert Parsley, CEO in the local office of Colliers International. The building's coming to market shouldn't present a significant hurdle in the CBD's recovery due to the absence of construction and the economic rebound is proceeding as expected. But, he forewarns, it will take more than five years before occupancy will climb above 95%.
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