Oft-Rejected Complex Sells After Two Years

Dallas-based Lincoln Property Co. and San Francisco-based Rreef America LLC are ramping up the plan for the complex at 5400 Memorial Dr., which needs the units upgraded and ceiling asbestos removed, G. Craig LaFollette, senior vice president with the Houston office of CB Richard Ellis Inc., tells GlobeSt.com. The rehab was a deal breaker in the past as was the complex's size, with 112 units being considered by some to be too small to realize a profit after covering upgrade costs. He estimates $10,000 to $15,000 per unit, factoring out to $1 million to $1.7 million, will be needed for the project.

LaFollette says bids were accepted twice for a property with a "triple A location" in the upscale Memorial neighborhoods just inside the Loop. The deal repeatedly fell apart despite an abundance of offers for the two-acre development.

LaFollette's not giving out any information on the asking ticket or the selling price. The Harris County Appraisal District, though, assesses its value at $3.5 million.

Lincoln and Rreef came on the scene about a year ago, says LaFollette. The deal took longer than normal to close "due to unique issues associated with this building," says the CBRE senior exec, explaining the buyers wanted the tenants out before they'd close the deal.

After the rehab, rent will go from 90 cents per sf to about $1.25 per sf, LaFollette says, adding it will take about a year to upgrade and stabilize the asset. Units average about 1,000 sf. LaFollette says the new owners can realize a nice profit down the road in a resale once the property's repositioned. In addition to LaFollette, the CB Richard Ellis negotiating team included J. Todd Stewart, senior vice president, and Todd Marix, first vice president.