"This price sets a new benchmark for the Houston market and adds a lot of credibility to it," an industry player says. "It also helps stretch the value for properties throughout the marketplace."
According to Jeff Hollinden, senior managing director with Holliday Fenoglio Fowler LP's Houston office, the buildings received a significant amount of interest. "It was really a Who's Who list of institutional buyers," he tells GlobeSt.com. "There were a lot of offers because this is one of the top quality assets in the suburban Houston office market." He represented the seller, C F Woodlands Office LP, an affiliate of Houston-based Lionstone Group.
Lionstone acquired Waterway Plaza I and II in January 2004 for $42 million from Anadarko Petroleum Corp. At that time, the buildings were roughly 45% occupied. Today, the nine-story, 223,483-sf Waterway Plaza I at 10003 Woodloch Forest Dr. is 98.3% occupied while the six-story, 142,560-sf Waterway Plaza II at 10001 Woodloch Forest Dr. is 95.4% leased.
The 23-tenant roster has Salt Lake City-based Huntsman Corp. as the lead, occupying 134,127 sf under a 15-year lease. According to Hollinden, the company has a contractual obligation to add 27,000 sf in January 2007. The roster also includes Eli Lilly & Co., UBS PaineWebber, Charles Schwab and BBVA. The average annual rollover is 5.1% over the next decade, Hollinden says, adding less than 51% of the leases expire during that period. The buildings, with an attached 1,314-space parking garage, are now being leased by Houston-based Transwestern Commercial Services.
The Santa Ana, CA-based Triple Net Properties had the in-house team of senior vice president Steve Corea, Brendan Considine and Ryan Andrus negotiate the deal. Joe Byers of Las Vegas-based Commercial Realty Capital Corp. arranged financing through PNC National Bank.
Just last week, Triple Net sold the 100,240-sf Parkwood I at 10077 Grogan's Mill Rd. in the Woodlands. A local source says Parkwood Management GP LLC of Orange County, CA paid $12 million for the five-story, class A office building.
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