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HOUSTON-An 85,923-sf, seven-story, class B office building, situated just west of downtown Houston, has been acquired for about $9.3 million by Santa Ana, CA-based Triple Net Properties LLC.

Tony Thompson, CEO of Triple Net, tells GlobeSt.com that his firm, a 1031 Exchange syndicate, pulled together 14 tenants-in-common funds with some internal capital and also placed debt to purchase the building at 602 Sawyer St. The 97%-leased building is considered a “low-risk, medium-reward investment,” Thompson says.

The 21-year-old building’s tenant roster includes the US Secret Service and 911 Emergency Network. Thompson says those two tenants occupy about half of the building while another 13,000 sf is leased to the Houston Police Officer’s Pension System.

Thompson says the plan is to put about $500,000 into updates over time for common areas, roof and landscaping. Thompson adds the building, positioned on 2.5 acres, was renovated in 1997 so no major capital improvements are needed.

According to Thompson, the upside lies in increasing the existing below-market rents that some tenants now hold. As leases turn, rent will go from about $16 per sf to approximately $18 per sf.

Atlanta-based Goddard Investment Group is the seller of the holding, assessed at close to $5.4 million by the Harris County Appraisal District. Rusty Tamlyn in the Houston office for Dallas-based Trammell Crow Co. represented the seller. Gary Ruhl of Triple Net and Peter Kepper of Denver-based Essex Financial arranged an acquisition loan through Nomura Securities.

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