Behind the Deal: 111 Realty's Energy Corridor Buy

Whatever it takes to get the deal done, right? Yesterday, 111 Realty OPO—a partnership led by Mallick Group and Keating Investments—purchased Oak Park Office Center III in a complicated transaction that included multiple tenant groups at the table for the single-tenant building. Here's how it went down.

HFF director Trent Agnew and senior managing director Robert Williamson  repped seller Daymark Realty Advisors and tell us the asset looks like a straightforward single-tenant property—the 151k SF building is fully occupied by CB&I. But there are extra moving parts; it’s actually a sublease from Jacobs Engineering. Jacobs has a termination right in its lease, and CB&I has renewal rights. That means the building could go vacant in a year, or it could remain occupied through 2018. (If you were in Vegas, would you take those odds?)

But Robert says potential buyers were comfortable with either possibility—on one hand, you end up with a quality 2008 building stabilized with a credit tenant. He and Trent say everyone loves its location, from the West Houston submarket, to the appealing business park, to its Beltway visibility. On the other hand, vacancy would create upside opportunity that buyers today clamor for. The HFF team received 16 offers for Oak Park Office Center III, and ended up with four finalists. (Three were institutional advisors.) Lincoln Property Co was awarded management, and IBC Bank provided acquisition financing.

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