Quick Action Leads to Loan Closing for a Complicated Transaction

HOUSTON—The original Texaco headquarters at 1111 Rusk St. was vacated in 1989 when the firm relocated to a new downtown office. In 2013, Provident Realty Advisors, a privately held Dallas-based real estate firm, purchased the 16-story historic office building, the Star, and began an extensive renovation in late 2014.

The redeveloped class-A mixed-use asset opened for leasing in late 2018 and includes a 286-unit luxury multifamily project with 26,442 square feet of ground-floor retail and an adjacent newly constructed 682-stall parking garage. The original brick, terra cotta and limestone facade, and the ornate limestone arcades were restored during the renovation. Additionally, the building interiors and systems were almost entirely replaced, with select historic finishes retained and restored.

PCCP recently closed on the purchase of a $99.3 million performing senior loan collateralized by the Star. The senior loan was purchased at a significant discount to par value, details of which were not disclosed. In conjunction with the note purchase, PCCP entered into a loan modification agreement with the existing borrower, Provident Realty Advisors, whereby significant new capital was provided.

“We were very fortunate to get connected with PCCP,” says Jay Hawes, president of Provident. “We needed to close this transaction in less than two weeks, while in the middle of the COVID shutdown.  PCCP moved quickly and provided a creative solution to a complicated transaction.”

Located on a full city block totaling 1.5 acres, the Star is one of the few newly developed multifamily projects in downtown Houston. It provides a unique offering relative to other downtown high-rises as one of few preserved historic fixtures in the submarket.

“PCCP is pleased to be able to recapitalize the Star as part of purchasing the senior loan,” said Ron Bonneau, managing director with PCCP. “This quality asset stands out among other apartment rental options in downtown as it offers residents high end luxury amenities and finishes along with the allure of living in a unique historic building.”

The Main Street and the East-West rail lines are adjacent to the property and accessible on Rusk and Capital streets, offering access to the University of Houston, NRG Stadium, Buffalo Bayou and the Texas Medical District with 100,000 employees. Within two blocks of the Star is access to the Houston tunnel system which includes 7.5 miles of climate-controlled pedestrian walkways connecting 95 city blocks. It is also within a 10-minute walk of Toyota Center, Minute Maid Park and the Discovery Green, downtown’s 12-acre urban park.

“The Houston economy is currently experiencing the double punch of COVID-19 and low oil prices, however, high-quality assets in Houston have proven over multiple cycles to retain tenant demand and attract capital,” Bonneau tells GlobeSt.com. “This factor along with the strong sponsorship in Provident attracted us to the Star.”

Downtown Houston has benefited from more than $9 billion in investment since 2000, contributing to the establishments of arenas, parks, office towers and residential development, all of which has attracted a large renter base with strong demographics.

The property includes a mix of one-bedroom (72%) and two-bedroom (28%) units, with an average unit size of 1,042 square feet.