HOUSTON-M-M Properties has acquired 919 Milam, a 24-story, 542,919-square-foot office tower in downtown, in an all-cash deal.
The local owner purchased the class A- property for an undisclosed amount from PNC Realty Services, which foreclosed on the asset earlier this year. However, local experts tell GlobeSt.com 919 Milam sold for roughly $110 per square foot, which translates to a sale price of $59.7 million.
Owned by Chicago-based Transwestern Investment Co. since 2007, 919 Milam attracted interest from a variety of buyers including both private and institutional investors, according to Russell Ingrum, executive vice president of CB Richard Ellis’ local office. He represented the seller, along with Gary Carr and Todd Casper, also of CB Richard Ellis.
Ingrum tells GlobeSt.com that 919 Milam was brought to market without a list price and received 15 bids of varying values. “All buyers have their own idea of value,” he notes, adding that the executives leading M-M Properties were familiar with 919 Milam because they had owned the building in the past while working for another company. “That really gave M-M an advantage. They knew the building inside and out.”
Situated on a full city block, 919 Milam is located just three blocks away from the federal courthouse and one block west of the Main Street METRORail station. It sits at the nexus of the city’s seven-mile pedestrian tunnel and skywalk system, which connects more than 40 million square feet of retail and other amenity space.
The building connects directly to the tunnel, along with 77 of Houston’s major office buildings. Moreover, 919 Milam is home to The Coronado Club, which was established in 1957 and remains Houston’s most prestigious private dining and social club.
Currently, 919 Milam is 76.4% leased to a mix of public and private companies including Capital One, Sterling Bank, Kelly Services and Genesis Energy. Roughly 63% of the property is leased until 2013 and beyond.
Ingrum says 919 Milam also provides investors with a value-added opportunity. One of the building’s largest tenants, the US Attorney General, is vacating its space early next year, which creates a vacancy of 127,929 square feet to backfill at market rates.
“Several of the building’s current tenants want to expand, so the new owner will have internal growth to help absorb some space,” Ingrum notes. Additionally, M-M Properties plans to focus on smaller tenants rather than competing for tenants looking for larger blocks of space.
“The building is in good shape, so it doesn’t need to be repositioned, it just needs to be backfilled,” Ingrum says. In fact, 919 Milam received $16 million in significant capital improvements since 2006. These enhancements include the replacement of the roofs on the fourth, fifth, 24th and 25th floors, the modernization of the main lobby, complete restroom renovations on several floors, and the remodeling of the building’s elevator lobbies and corridors.
In addition to the numerous capital improvements, a number of sustainable practices have been implemented throughout the property. As a result, 919 Milam has recently been awarded LEED certification at the Silver level. Additionally, the U.S. Environmental Protection Agency has granted the Property its Energy Star
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