How to Make a Foreclosed Building Class-A
Not every building and owner has benefited from Houston's boom time--the tenant in common ownership at 4801 Woodway struggled to fund TI and leasing commissions, dropping occupancy to 48% and resulting in foreclosure. Luckily, the story has a happy ending--the special servicer kicked off a multimillion-dollar renovation to bring it up to Class-A, and now a Houston-based private equity real estate group has purchased the 212k SF Riverway office building. Angelic Real Estate president Gabriel Silverstein and director Louis D’Lando arranged acquisition financing--above, Gabriel celebrated his closing by taking an aerobatic flight training course last week. It teaches trick flying (like you see in air shows), but he won’t be performing--it was pilot cross training (like how doing industrial and retail financing taught him things he applies on office deals).
Gabriel's financing includes a substantial "good news" facility to fund TI and commissions to get that occupancy up. Add in the upgrades, and the property should be able to flourish--it's in a fantastic location, Gabriel says, and at a cost basis that allows the new owner to very aggressively compete for tenants versus expensive Galleria pricing. It has perks for large and small tenants alike—bigger users benefit from the large floor plates and two parking garages, but smaller groups can enjoy the two interior upper floor atriums. The special servicer already renovated all three lobbies (including new glass entryways and marble floors), upgraded first floor bathrooms and common corridors, and has done numerous mechanical and structural upgrades and exterior painting. Still on the to-do list: Remodeling the remaining restrooms and upper floor common corridors, modernizing elevators, adding a cafe, upgrading the shared conference room, and improving the parking garage and building landscaping.