"The property wasn't on the market for that long, but there was a CMBS loan that had to be assumed," says H. Dan Miller, senior managing director with Holliday Fenoglio Fowler LP's Houston office. He and HFF associate director Martin Hogan represented the seller, RPD Catalyst LLC of Los Angeles. The class B office building sits on nearly one acre of ground-leased land at 1001 Texas Ave.
Miller says the asset is shouldering an assumable loan with low leverage, requiring Royal Investors Group LLC to pony up a substantial amount of equity for the asset. "They were fully willing to do that as opposed to getting additional or mezzanine financing to stack on top of that," he tells GlobeSt.com. "We didn't want to wait around in this market for someone trying to find the financing."
Miller goes on to say that the buyer owns retail properties in the city and is familiar with ground leases. "The buyer fully understood what it's like to own something on a ground lease," he stresses.
Built in 1982, the recently renovated Binz Building is 95% leased. Miller says the lease roll is very even, 15% to 20% per year. The quoted rate hovers $20 per sf net. "There are a lot of telecommunications tenants in the building and generally those guys have longer term leases," he says, adding the upside rests on the fact that rents are below market.
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