30,000-SF Office Attracts 18 Offers

HOUSTON-Locally based Pacific Sun Investments LP beat out 17 other offers for the privilege of owning, and operating, a 30,000-square-foot office building in the Westchase submarket. The class A building, sold by Brookfield Real Estate Opportunity Fund, was 50% leased by JPMorgan Chase, which was part of the asset’s appeal.

H. Dan Miller, senior managing director of Holliday Fenoglio Fowler LP’s Houston office says the building belonged to JPMorgan Chase several years ago before the company sold to the Brookfield Asset Management’s fund. Miller, who led the marketing effort on behalf of the seller with help from HFF analyst Trent Agnew, tells GlobeSt.com that the portfolio had included major buildings downtown as well as branch-banking facilities such as the one at 10411 Westheimer Rd.

“They sold the major buildings downtown, then went about leasing and stabilizing the branches around town,” he explains. “They got this building to 100% occupied, then put it on the market to harvest the capital.” Though he declined to discuss the sales price, he says the building had a 8% cap rate.

But Miller and Agnew were bemused by the attention this asset received during the marketing period. Miller set a call for offers and said that, within a week, he had 18; four of which were willing to put money at risk on the first day to buy. “The level of interest was refreshing,” Miller acknowledges.

Agnew says Pacific Sun Investments ultimately made the most aggressive offer, all cash, and were willing to close quickly. “They actually wanted to close faster than the seller could close,” Agnew adds. “The buyer wanted to do it in 10 days, but it took us close to 30.”

Miller explains that the building represented a perfect storm in which everything aligned. There was the fact that half the building was leased, long-term, to a national credit tenant. There was the fact the asset was on an almost four-acre tract, which allows potential future development.

Then there was the location. “You had an irreplaceable location at the corner of Westhemier and Beltway 8 and three streets of frontage,” Miller comments. He goes on to say that the deal was unique, with everything in alignment and it proves that with the right asset, buyers will come out with checkbooks in hand. “I wish I had 10 of these types of buildings,” Miller comments.