GlobeSt.com UPDATE: $102M Post Oak Sale Closes

HOUSTON-Koger Equity Inc. of Boca Raton, FL beats the calendar’s turn, as it said it would, to close the $102-million purchase of the 1.2-million-sf Lakes on Post Oak in Houston. The REIT now is readying plans for a $12-million renovation of the three-building, class A holding.

Thomas Crocker, Koger’s CEO, said in a prepared statement that the renovation will be followed “by an aggressive marketing and leasing program driven by our competitively low basis.” The upgrades to the 75%-occupied complex will be done by the end of next year, according to Crocker.

Koger structured the deal with $77 million of five-year, project-level, non-recourse debt. The debt carries a floating interest rate equal to 287 basis points over LIBOR, with a two-year LIBOR cap of 5.45%. Koger drew down a revolving line of credit for the $35-million balance and set up a $10-million escrow for tenant improvements, leasing commissions and deferred maintenance.

Koger said the plan is to reimburse the credit line by refinancing the 803,160-sf Three Ravina in Atlanta. The office property, owned by a Koger affiliate, was acquired through a revolving credit line that will be replaced with an $85-million, five-year, non-recourse mortgage at a fixed 5.26% interest rate.

Koger acquired 3040 Post Oak Blvd. from Nippon Life and 3000 and 3050 Post Oak Blvd. from Dallas-based Cottonwood Partners. Hines Interests developed the 28-acre project between 1979 and 1981. For previous story, click here.