About five years ago, Insite Realty of Houston, the portfolio's leasing and property manager, formed a partnership with the Minneapolis-based Cargill Inc. to buy the mix of 1970s-era properties, situated on 30 acres at the intersection of Beltway 8 and the Hardy Toll Road in the city's northern sector. Kris Van Norman, an Insite principal, tells GlobeSt.com that the latest sale was closed by a newly created partnership in a first-time teaming with Dallas-based Westmount Realty Capital LLC. "It's an arm's length sale," he says of the 74%-leased, class B package. "The operational side of the property will be the same."
Clifford Booth, Westmount's president, says the deal closed at nearly 20% less than the $16-million ask. "There was less competition for this portfolio because it's not bulk-distribution space," he says. The Dallas office of Holliday Fenoglio Fowler LP arranged acquisition financing through GE Capital Corp.
Booth says the new ownership plans to spend $2 million to rehab and re-tenant the buildings. "We're value-added buyers and that is our mainstay. We believe this acquisition will be a value-added play," he says, adding the assets are particularly attractive because they are made up of small office/warehouse spaces. "We think that's the bread and butter."
The portfolio consists of five separate, but adjacent complexes. It includes a trio of three-building developments: the 71,101-sf Greenbriar Square Plaza; 96,937-sf Greenbriar I Plaza; and 77,474-sf Greenbriar II Plaza. The other properties are the 85,692-sf Greenbriar 8 Plaza and eight-building, 142,941-sf Hedgecroft Square. The buildings rent for $2.40 per sf to $6 per sf.
Houston's Continental Airlines is the largest tenant with 27,000 sf. Other top space takers are Midlothian, VA-based Control Dynamics, 25,000 sf; locally based Goodman Manufacturing Co. LP, 18,000 sf; Securitas Security Systems USA Inc. of Norcross, GA, 15,000 sf; and Majewski Transportation Co. of Houston, 15,000 sf.
"We exited the market about 10 years ago," Booth says, "and we're excited about re-entering Houston. We think the time is right. The market is recovering."
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