JV Takes Second Houston Office Property
- Jan 22, 2008
In the hot Houston market, Chase Merritt and joint venture partner Pacific Coast Capital Partners L.L.C. have taken its second asset in the region with the 424,000-square-foot mixed-use Four Corners in Houston for an undisclosed price. In November, the joint venture acquired West Loop I and II, two Class A office buildings totaling 314,000-square-feet, located in Houston’s Bellaire submarket. “Historically, Houston has been a strongly cyclical market, because of its ties to the energy industry,” Chad Horning, president & CEO of Chase Merritt, told CPN in November. “But more recently, that’s been mitigated by economic diversification, and the internationalization of the energy industry. We believe Houston’s office market is going to continue to be strong going ahead, and we’re actively looking for more office properties in the market.” The Four Corners property includes two adjacent Class A office buildings totaling 395,473 square feet, two retail buildings totaling 28,920 square feet and two parking structures. The property is 84.3 percent occupied by a diverse mix of tenants and is located at the southeast intersection of Westheimer Road and Sage Road. Four Corners is located directly adjacent to the 2.4 million-square-foot Galleria retail complex approximately nine miles west of the Houston CBD.Built in 1976, the 11-story, 217,005-square-foot office building known as Telecheck Plaza is currently 81.3 percent leased by tenants including Telecheck Services, Southwestern Bell Telephone and Bechtel. Completed in 1969, the 10-story, 178,468-square-foot office building known as 5333 Westheimer is currently 89.7 percent leased to tenants including Petroleum Info. Corp., ePartners, Inc. and SAS Institute. The location of Four Corners near the Galleria and the upside potential through the lease-up of vacant space and a price well below replacement cost made the acquisition attractive. “The location in the Galleria submarket is great and vacancy there is under 8 percent. This property’s vacancy is currently in the mid-80s, so we see an upside in the vacancy,” Ryan Parkin, acquisitions analyst with PCCP, told CPN today. “Acquiring an asset at well below replacement cost in a good location with long-term favorable job growth prospects made the timing right.” The joint venture purchased the property free and clear of debt, according to a Holliday Fenoglio Fowler L.P. spokesperson. HFF senior managing directors Dan Miller and Rusty Tamlyn and associate director Martin Hogan headed the investment sales team on behalf of the seller, Cannon Commercial Inc. led by Kam Mateen Substantial capital improvements are planned for the property, according to Pacific Coast Capital Partners information.From September 2006 to September 2007, Houston added the third-highest number of jobs in the nation with more than 60,000. The large recent employment growth is expected to slow down slightly, however, according to Property & Portfolio Research.Pacific Coast Capital Partners has invested more than $5.3 billion in the Western United States and continues to seek investment opportunities. Chase Merritt is a national commercial real estate investment and asset management company headquartered in Newport Beach, Calif. that has acquired, developed and disposed of more than $500 million of real estate assets. Chase Merritt’s current office portfolio is valued at more than $400 million.