509,997-SF Houston Trade Closes for About $39M in Cash

Granite, taking its second class A deed in town in three weeks, eliminated the competition and made the close within 30 days in an all-cash transaction with Dallas-based Presidio Investments LLC for the 24 E. Greenway Plaza property, Scott Martin, Granite's managing director in Houston, tells GlobeSt.com. Granite's takeover plan replaces locally based Transwestern Commercial Services for leasing and management of a 20-story tower positioned on three acres at the hard corner of Weslayan Street and Southwest Freeway, right on the western edge of an office building hub of predominately class A space. Presidio bought the property in June 1999 along with equity partner, Credit Suisse First Boston.

The 23-year-old high rise was 72% leased at closing. "There's not much rollover in the building for a year or two," Martin says, adding the next lease doesn't come due until June 2005. The roster's largest tenants are Compass Bank of Texas, Dallas-based Infinity Broadcasting, Weisenberg Insurance Co. and management consultants, Richard Wayne & Roberts.

The building's largest contiguous block is 30,000 sf or a full floor; the quoted rate runs from $18.50 per sf to $19 per sf. The structure, last renovated in 1996, traded in topnotch condition although Granite will assess what, if any, upgrades might be needed. "It will be fairly minimal at best," Martin says.

The Granite team of Bill Brown and Paul Bennett handled the transaction, which closed with no debt, no assumption and no JV partner. "It gives us the unique opportunity to respond quickly," Martin explains.

Year-to-date, Granite has spent $100 million in the city out of $150 million earmarked for acquisitions in its core markets, which include Dallas/Fort Worth and Atlanta. Next year, the firm has allocated $200 million for the core cities, Martin confides. The hard focus on Houston wasn't as much planning as opportunity. "It just happened that there were more opportunities available in Houston than Dallas or Atlanta," he says. "We are opportunistic. You never know where it's going to happen or which particular city. This year, it just happened there were more [opportunities] in Houston."

Just three weeks ago, Granite bought the 466,025-sf One Westchase Center at 10777 Westheimer Rd. from Dallas-based Prentiss Properties. With the Weslayan Tower deed, Granite's Houston portfolio now holds 2.7 million sf of office space and 1.7 million sf of industrial product. Martin says he's looking for more, but there are no pending contracts right now.