HOUSTON-In a dramatic close to a three-year hold, the Amstar Group and Cameron Management have sold the historic Esperson Buildings. The 599,107-sf landmark on a full city block is assessed at $41.5 million so it’s a safe bet that the all-cash trade rang up considerably more at the closing table.

The new owner is Seligman Western Enterprises Ltd., an affiliate of Detroit-based Seligman & Associates Inc., the highest offer of at least 10 that rolled in for the Niels Esperson Building at 808 Travis St. and Mellie Esperson Building at 815 Walker St. and their 600-space parking garage at 806 Rusk St. The no-ask offering went from marketing to closing in 90 days, drawing mostly out-of-state investors to the chase. “It speaks to how much attention Houston is getting from investors on a national level,” says Doug Wiley, executive director of Denver-based Amstar.

Wiley says Seligman had a clear-cut advantage on the buying field because it has a historic office building in its portfolio. “They did bring a lot of certainty to close because they have one of these in San Francisco,” he says. “They were the right buyer.”

Wiley tells GlobeSt.com that the 75%-leased Esperson Buildings have less than a 15% annual roll in leases for the next three years. The upshot is Seligman can tag team on the upside by filling the 25% vacancy and getting market rates from rolling below-market leases. As the acquisition pushed toward closing, Wiley says rates had increased 20%. “They will get to immediately recognize higher rates in a fully renovated and well-maintained iconic asset in an extremely hot market,” he stresses.

The 27-story Italian Renaissance-style Niels Esperson building and garage were developed in 1927 by Mellie Esperson as a monument to her husband. Her namesake building, more demure in design, was added in 1941, with the two structures wed by a 16-story base to form one complex.

Wiley says the decision to part with the buildings wasn’t easy, but Amstar’s investment philosophy is buy, add value and sell. “We unfortunately have to not fall in love with our real estate,” he says.

CB Richard Ellis EVP Richard Rudd, who sold the buildings to the JV in December 2004, once again led the marketing, with help from associate Kent Peters and analyst Jared Chua. The list of would-be buyers included institutions and private investors, many of which previously didn’t rank Houston as a buy. That wasn’t the case when the JV bought it. “Dougal Cameron identified this acquisition opportunity at a time when institutional investors were shunning Houston,” Wiley says in a pending press release.

Amstar and its local partner acquired the complex on the heels of a six-year renovation. Wiley says they added more value by seating “a few named tenants who have really identified with the building.” A 25,000-sf tenant, Horizon Wind Energy, is negotiating a headquarters expansion that could catapult it into the lead tenant’s spot. Cameron has leased and managed the complex throughout the hold.

When the JV bought the class B-plus complex, Houston’s CBD vacancy exceeded 20% and class A rates were slightly more than $20 per sf. Today, vacancy hovers 10% and class A rates are roughly $30 per sf.

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