Younan Properties Buys Houston Trophy Office Tower—Again
- Jan 07, 2021
Younan Properties has added Two Westlake Park, a trophy office property in Houston’s Energy Corridor, to its portfolio. It’s a repeat performance for Younan, as the company had owned the 455,000-square-foot asset for four years until selling it to KBS Realty Advisors in 2011 for $80.5 million.
Younan, which has not publicly disclosed the purchase price of the occupancy-challenged Two Westlake, represented itself in the transaction, while JLL Capital Markets’ Dan Miller and Martin Hogan represented the seller.
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Located at 580 Westlake Park Blvd. within the 2.8 million-square-foot Westlake Park master-planned business park, Two Westlake first opened its doors in 1983 as a development project of Hines. The Skidmore, Owings, & Merrill-designed tower has since been maintained through a series of upgrades, including more than $11 million in capital improvements since 2006.
Other changes have transpired at the 17-story high-rise since Younan held it in its portfolio; the property has come under new ownership on a few occasions. In 2014, KBS sold the asset to Pimco Bravo Fund II LP and Hicks Management LLC for $120 million. In 2018, the loan on Two Westlake transferred to special servicing and two years later in mid-2020, Rialto Capital came into possession of the asset by picking up the $88.1 million loan on the property for $35 million in a foreclosure transaction, according to Trepp.
With Two Westlake’s largest tenants—BP Amoco and Conoco—having vacated the property in 2019, the building is struggling after decades of maintaining occupancy levels in the mid- to upper-90 percent range. The property was 6.7 percent leased as of June 2020, according to Fitch Ratings’ commentary from September 2020.
But Younan has faith in the Houston office market and is angling to restore Two Westlake to its high-occupancy glory, pinning its hopes on Houston’s energy sector. As Zaya Younan, CEO of Younan Properties, said in a prepared statement, the real estate investment company believes this is a turning point for the Houston oil & gas industry. In its fourth quarter 2020 report, Savills concurs, pointing to numbers from the Energy Information Agency and asserting that “oil demand (is) expected to recover strongly in 2021.”
Younan plans to make a substantial investment in the repositioning of Two Westlake, with the goal of elevating the property to one of the leading Tier 1 office destinations in West Houston’s Energy Corridor through creative renovations and updated amenities. Younan’s re-purchase of Two Westlake was not simply for old time’s sake; the company is in the midst of expanding its presence in Houston via value-add opportunities.