HFF Engineers Sale, Acquisition Financing for 5-Property Houston Office Portfolio

HFF has wrapped up the disposition of the approximately 347,300-square-foot Westridge Realty Partners office-building portfolio in Houston.

August 11, 2011
By Barbra Murray, Contributing Editor

1250 Wood Branch Park Dr.

Standing in for the seller, Holliday Fenoglio Fowler L.L.C. has wrapped up the disposition of the approximately 347,300-square-foot Westridge Realty Partners office-building portfolio, but the real estate services firm’s work did not end there. Acting on behalf of the buyer, Peloton Capital Partners, HFF also orchestrated acquisition financing and joint-venture equity for Peloton’s purchase of the group of five assets.

The 78 percent-occupied portfolio includes two properties in the city’s thriving Energy Corridor, the 103,000 square-foot building at 1250 Wood Branch Park Dr. and the 61,900 square-foot building at 11931 Wickchester Lane, constructed in 1982 and 1984, respectively. Located in the Westchase submarket, the remainder of the portfolio consists of the 31-year-old, 61,800 square-foot building carrying the address of 10200 Richmond Ave., and 2950 and 3030 S. Gessner Rd., which feature a combined 121,000 square feet developed in 1978.

Peloton had its share of competition in its bid for the office properties. “Capital rates have compressed so people chasing yield have turned to cities with positive fundamentals like job growth, good absorption and other major economic drivers to invest capital,” H. Dan Miller, senior managing director on HFF’s investment sales team, told Commercial Property Executive. Houston is just such a market, he says. “Houston has the largest medical center in the world and the one of the largest ports, so the projections for job growth rank among the top three among major metropolitan markets. Also, Houston absorbed just shy of 1 million square feet over the last three quarters.

Investors are also growing increasingly attracted to properties that have long-term potential, and the Westridge assets fit the bill. “The portfolio was a value-add opportunistic deal,” Miller said. “The owner can lease up and stabilize and sale, so there was a lot of interest in the portfolio because there’s a lot of money chasing opportunistic deals.”

HFF’s debt placement team helped Peloton obtain fixed-rate acquisition financing through NexBank, as well as joint venture equity from a private real estate equity firm based in Austin.