The borrower, headquartered in Sugar Land, TX, bought what was the Baker Hughes Inc. plant at 5301 Polk Ave., with plans to reposition the 75-acre asset. "They ended up with a lot of good diversification of tenancy," comments Robert D. LaRue, principal with Live Oak Capital Ltd., who arranged for financing through Ohio National Life Insurance Co. "There isn't a lot of roll, either, though they've gone in and reworked some of the leases." The main tenants are Grant Prideco Inc., Baker Oil Tools, a subsidiary of Baker Hughes, and Pipeco Services.
LaRue tells GlobeSt.com that Pelec Development's owners weren't under any deadline to refinance the asset, but decided the time was right. "They still had another year-plus to go on the existing loan," LaRue comments. "They decided they weren't likely to get credit for that last 5% of remaining space anyway, so they went for it." He says other lenders were interested in the project given its tenant base and location near the Houston ship channel. Ultimately, the Cincinnati-based Ohio National Life provided the best rate and terms through a fixed-rate loan with a 20-year amortization.
In the meantime, Pelec Central City's owners aren't planning to sell the complex any time soon. LaRue says the asset is an older one, built in the 1950s, and it has a mixed bag of buildings ranging from 5,000 square feet to 138,000 square feet. The benefit, however, is that it has appealed to the smaller users.
"It's in a strong submarket as well," LaRue adds. "That submarket has been 95% leased for the past ten years. This was a terrific opportunity for these guys when they bought it a couple of years ago."
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