"They didn't have the highest offer, but what set them apart from everyone else was a short due diligence and closing period--plus they closed all cash," says Robert Williamson, managing director in Houston for Holliday Fenoglio Fowler LP. He partnered with HFF managing director Jeffrey Hollinden, executive managing director Scott Galloway and associate director Barbara Guffey to broker the transaction, the same HFF team that sold the 356,750-sf 2000 W. Loop South to the San Francisco-based Shorenstein last fall.
The 93%-leased high rise, situated on 3.6 acres at 4400 Post Oak Pkwy. in the Galleria, attracted 15 to 20 offers from REITs, private investors and institutional buyers. Sources yesterday were wrong in early predictions that the sale trumped the $271.5-million contract for the nearby 1.47-million-sf Williams Tower at 2800 Post Oak Blvd.
Hollinden says Shorenstein is starting with a staggered lease roll in the class A building. The lead tenant, Amegy Bank, has until 2016 before its lease rolls. "The rents in place are way below market because the rents in the submarket have increased so quickly," Hollinden tells GlobeSt.com. "This is a great opportunity for Shorenstein to increase cash flow and add value by renewing tenants at higher rents."
The HFF brokers say a tenant on the top two floors has already extended its lease for another three years. According to Williamson, the lease was slated to expire in 2009, but the renewal decision came right at the tail end of the escrow period. "They renewed at a healthy rental rate increase, which validates the upside potential," Williamson says. Shorenstein will handle management in-house. The leasing assignment has not been determined.
Guffey says Shorenstein has targeted Houston for more class A office investments. "Their focus is on the CBD, Galleria and Westchase," she says about the recognized long-term holder. The asset was bought for Shorenstein Realty Investors Nine LP, a $2-billion private commingled fund formed in spring 2007.
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