Galleria-Area Office Building For Sale After Foreclosure
A 632K SF office building at 5400 Westheimer Court is listed for sale after its sole tenant moved out and the owner turned it over to the lender.
The nine-story building was formerly known as the Spectra Energy Headquarters and served as such until Spectra was acquired by pipeline company Enbridge Inc. in 2017. Enbridge occupied 620K SF of the building until it moved to a much smaller space in the Energy Corridor in 2022.
Enbridge’s lease officially expired in April this year, after the $52.5M loan on the property had been transferred to special servicing in January, according to special servicer comments provided by Morningstar Credit. Ladder Capital Finance provided the loan to the building's owner, PTAD Realty.
PTAD is an entity controlled by the DiMare family of DiMare Fresh food distributors, according to CoStar News.
PTAD wished to transition the building to the lender in an orderly fashion, according to the comments from Argentic, the special servicer. The foreclosure sale occurred June 2, and JLL is now marketing the property for sale on behalf of the lender.
Meanwhile, 5400 Westheimer Court’s value has been slashed by 75%, according to Morningstar. The new appraised value is $20.7M, down from $84.5M when the loan was originated in 2014.
“With submarket vacancy still in the mid-20% range, leasing up even a significant portion of the 614,000 square feet at the subject is going to be a daunting task,” Morningstar said in a CMBS Newsflash on Monday.
The office building was built in 1981 and sits on 6.4 acres, according to the sale listing.
An entity called Tanglewood Manor LP in May bought a 3-acre tract at Westheimer Court and Yorktown Street that was previously part of the office building’s parking lot, according to Harris County records. A replat request filed with the city indicates a townhome development may be planned for that site.
Attempts to reach PTAD Realty, Argentic and Ladder Capital Finance for comment were unsuccessful.
Spectra Energy Headquarters’ story mirrors that of 3000 Post Oak, a 442K SF office building about a mile away. That building was left vacant by Bechtel Energy’s departure in 2022.
A representative of 3000 Post Oak’s owners told Bisnow in April that they planned to turn the building over to the lender through foreclosure, despite their best efforts to reposition it.
