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HOUSTON-Municipal entities, owed $3 million in taxes for Enron Center South, will pursue their right to be at the head of the line when a $102-million disposition begins from the sale of the 1.2-million-sf high-rise in the Houston CBD. The US Bankruptcy Court for the Southern District of New York yesterday approved the final price and the buyer, Intell Management and Investment Co.

The City of Houston, Harris County, Houston Independent School District and the Downtown Management District have their liens in place for the outstanding taxes owed on the bankrupt energy giant’s headquarters. But, their money won’t be coming at closing as they wanted. Instead, they must pursue a course to collect from Enron when it starts doling out funds. The closing is to be completed before the year ends.

Judge Arthur J. Gonzales yesterday rejected a motion for payment at closing and recommended filing a separate motion that would put the taxing bodies at the top of the payment list after Enron collects its check from the building sale, says John Dillman of the Houston law firm of Linebarger, Goggan, Blair, Pena & Sampson. He tells GlobeSt.com that Enron owes close to $6 million on its properties, but only half of the bill is for Enron Center South.

By law, the taxing bodies must now notify each creditor of their intent. Those notices will be going out, Dillman stressed. “State laws give taxing authorities priority over consensual lien holders,” he says, adding he fully expects the court will uphold the priority ranking.

According to Dillman, the only other direct lien holder is JPMorgan Chase, which is an agent for a lenders’ syndicate. Some of those claims will be cleared prior to closing, Karen Denne, Enron’s spokeswoman, tells GlobeSt.com. She says Enron plans to pay $4.9 million from the proceeds of the building sale to lenders in addition to what is owed to the municipal taxing bodies.

The sale “represents the maximum value for our creditors,” Stephen F. Cooper, Enron’s interim CEO and chief restructuring officer, said in a press release issued within hours of the court approval of Intell as the buyer.

At a heated bidding spanning two days, Intell beat out Fort Worth’s Crescent Real Estate Equities, Dallas’ Lincoln Property Co. and a Houston trio of bidders, Hines Interests, Boxer Properties and Transwestern Commercial Services. The winner’s president Gary Barnett describes his prize as “a trophy asset in the energy capital of the world.”

The auction format was handled by a Holliday Fenoglio Fowler team consisting of Mark Gibson, executive managing director in Dallas, and Jim Savage, senior managing director, and Jeff Hollinden, senior director, both from the Houston office. Gibson tells GlobeSt.com that the auction attracted “the best of the best players to the table.”

The transaction was “unique and complicated,” said Hollinden, “given the overlay of the bankruptcy proceedings.”

Pre-sale calculations projected that it will take 36 months to lease the building, said Savage. He said he’s confident Intell will handle the high-rise “prudently” and attract credit-worthy tenants.

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