HOUSTON-With plans to invest more than $2 million to reposition the 390,000-sf twin towers, a local partnership has acquired Arena Place from Lennar Partners. The 19-story towers form the largest office complex in the Southwest Freeway submarket.

Led by Fred Schiller of Houston, the partnership, Arena Group LP, was one of 11 private investors placing offers on property, says Robert Williamson, managing director of Holliday Fenoglio Fowler LP, who represented Lennar in the transaction along with managing director Jeff Hollinden. “It’s a pure value-added opportunity and that’s why they were interested,” he says.

Located at 7322 and 7324 Southwest Freeway on 9.1 acres, Arena Place’s twin towers are bisected by a 2,850-seat live performance venue. Built in 1981 and 1983, Arena Place is 70% leased to tenants like Mercer Inc., a division of Marsh & McLennan Cos., LTD Financial Services, MemberWorks Inc. and Westwood College. “If the occupancy were increased from 70% to 80%, it would be a huge success,” Williamson says. Currently, space leases for about $14 per sf.

Williamson tells GlobeSt.com that Arena Place sold at a huge discount to replacement cost. He estimates it would cost $150 per sf to $160 per sf to replace the property. “The buyer paid a mere fraction of that,” he says. According to the Harris County Appraisal District, each tower is valued at roughly $12.3 million.

Lennar Partners foreclosed on Arena Place three years ago. “It was horrifically mismanaged,” Williamson says, “and Lennar has spent some time and money getting it to a better place so it can attract quality tenants.” Locally based PM Realty Group leased and managed the building for Lennar, but Transwestern Commercial Services Inc. will be taking over the assignment for the new owner.

Arena Group LP obtained new financing from Citigroup Global Markets to acquire Arena Place. Tucker Knight of HFF arranged the fixed-rate, 10-year loan.

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