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In the early days of the coronavirus pandemic, when Houston’s economy double hit After a public health crisis and collapsing oil prices, a deal for one of the city’s newest trophy properties fell apart.
A group led by Korean investment firm KB Securities had been selected as the buyer for the 48-story office tower at 609 Main Street in March, but taken out of the deal a month later. When the property hit the market in late 2019, it was expected to fetch up to $ 700 million.
Hines and the California Public Employees Retirement System, which completed the downtown Houston skyscraper in 2017, were hooked on a $ 230 million construction loan due in September. The lender, JPMorgan Chase, provided a $ 260 million refinance for the property that month, in the form of a single-asset commercial mortgage-backed securities deal.
Qualification documents for securitization please provide an inside view of 609 Main’s finances and rental listing.
In August, the 1.1 million-square-foot building was 94 percent rented to 31 tenants, according to a report from S&P Global Ratings. Fifty-five percent of the property had previously been rented prior to opening, with two Chicago-based companies serving as anchor tenants.
The building’s largest tenant is United Airlines, with 21 percent of the total floor area, and the property serves as the airline’s second headquarters. While the company suffered billions in losses due to the pandemic, United and other airlines now predict a rapid rebound as the US economy recovers.
“The company has invested $ 10.8 million ($ 47.38 per square foot) in tenant improvements on its nine stories, demonstrating its commitment to the property,” the S&P report notes. Although United has a contraction option of up to two full stories in the building, the fact that it is paying below-market rent also makes it less likely that it will exercise that option, according to S&P.
The building’s second-largest tenant is Kirkland & Ellis, the world’s largest law firm by revenue with more than $ 4.1 billion in 2020. The firm occupies the top floors of the tower, with penthouse suites that feature “a expansive skylight roof, “as S&P analysts observed in their inspection of the property.
The rest of the tower’s rental list is granular, with no tenant accounting for more than 5.1 percent of the total subscribed rent. Exposure to the energy sector is relatively low for an office building in Houston, at just 7.4 percent. Law firms account for 37 percent of the rental listing, while banks and financial services account for 16.7 percent.
And 609 Main also houses The second from WeWork in downtown Houston, which opened in 2019. The troubled joint venture recently turned to Transwestern Real Estate Services to market its 300,000 square feet of space at four Houston locations, with an emphasis on larger tenants.
With a presence in 225 cities in 25 countries, Houston-based Hines has developed more than 1,400 properties worldwide, since A Vanderbilt in New York City to A museum place In shanghai. And the company remains active in its local market.
Two blocks from 609 Main, Hines and Ivanhoé Cambridge are building the 47 story Texas Tower, which will open later this year. To the south, Hines and 2ML Real Estate Interests are planning a 53-acre life science district called Green levit.