$10M-Plus Loan Seeds Office Buy, Upgrades

HOUSTON-A limited liability company from Los Angeles has obtained $10.05 million to acquire and upgrade the 142,522-sf Westchase Office Buildings I and II. The transaction is the privately owned firm’s second in the Westchase submarket in the past year.

The class B buildings at 3000 and 3100 Wilcrest Dr. are assessed at $7.2 million. Area experts say comparable buildings in the submarket have sold for $80 per sf to $100 per sf. Seller Synermark Westchase LLC of Austin had owned the properties nearly 10 years.

The buyer of record is RPD Catalyst LLC. “Their plan is to renovate, build some tenant improvements and put some new tenants in,” says David M. Aaronson, principal with Live Oak Capital Ltd. of Houston. NewStar Financial Inc. of Boston fronted the deal with a three-year loan at a floating-rate interest.

“The relationship they had with NewStar helped with the loan,” Aaronson adds. “The buyer’s MO is to buy them, lease them up and sell them.” He tells GlobeSt.com that last year’s acquisition, Ashford on the Bayou, has gone from 25% occupied to 82% under the investment group’s watch.

The new owner is starting out with 75% occupancy on the Westchase Office Buildings. PM Realty Group, which leases Ashford on the Bayou, has been retained to lease the newest acquisition. The buildings’ quoted rate is $17 per sf, direct gross versus a going market rate of $17.98 per sf.

Occupancy is 83.9% for class B product in Westchase. The 4.9-million-sf submarket registered 87,566 sf of net absorption in the third quarter, according to local market reports.