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HOUSTON-Younan Properties Inc. has added the 253,125-sf 1700 W. Loop South and 118,000-sf Shepherd Place to its portfolio for a combined $47 million. The transaction puts the Los Angeles-based investment group in charge of 1.3 million sf in the city, with hopes to acquire 3.5 million more by mid-2008.

Younan Properties bought the 14-story Shepherd Place at 2323 S. Shepherd St. in the River Oaks submarket and the 15-story 1700 West Loop South in the Galleria from Chicago-based CMD Realty Investors Inc. The plan is to invest another $1 million into renovating the class B office assets.

Zaya S. Younan, chairman and CEO, says the upside potential was the attraction to buy the 1980s-era buildings. “When Shepherd Place was put under contract, it was 80% occupied and we ended up closing it at 95% occupancy,” he says. He tells GlobeSt.com that the new leases were signed for $23 per sf or $1.40 per sf more than Shepherd Place’s quote in recent months.

“When you see that type of rent growth in such a short period, it’s telling me we’re right to be buying more aggressively,” Younan says. PM Realty Group of Houston will continue to lease Shepherd Place while Transwestern’s local team is staying in place at the 95%-leased 1700 W. Loop South.

Younan says Houston’s phenomenal rent growth means his company will continue its acquisition binge. Two Westlake Park, a 381,327-sf, 17-story high rise at 580 Westlake Park Blvd. will be bought in the next month. And, Younan says, more buildings will soon be under contract.

“We’ve identified two primary markets in the entire state of Texas that we feel are tremendously undervalued and those are Houston and Dallas,” Younan says. “We’ll continue to buy there and to hold what we buy for the foreseeable future.”

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