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Loan On 25-Story Uptown Houston Office Building Moves To Special Servicing

An $80M loan issued to the owner of One Riverway, a 483K SF office building in Houston’s Uptown, has moved to special servicing. 

One Riverway

The loan was transferred to special servicing for imminent default amid ongoing occupancy issues, according to information shared with Bisnow by Morningstar Credit.

One Riverway is a 25-story office building owned by Unilev, which also owns its 398K SF, 20-floor neighbor Three Riverwayaccording to Unilev's website. Both are on Riverway Drive, off South Post Oak Lane near Woodway Drive. 

One Riverway’s occupancy was at 63% at the end of 2022, though Morningstar reported it had significant leasing activity at the end of the year that wasn't reflected in its report.

Stream Realty, which handles leasing for both One and Three Riverway, announced more than 65K SF of leases across the properties in September 2022. But Morningstar reported that Thompson, Coe, Cousins & Irons law firm, which occupies 11.1% of One Riverway, plans to vacate when its lease ends in January 2024.

German American Capital Corp., a subsidiary of Deutsche Bank, was the lender for the property, according to Securities and Exchange Commission filings. The 10-year, fixed-rate loan was set to mature in 2025, SEC filings show. The loan was at or below breakeven for the past few years, according to Morningstar. 

One Riverway joins several large office buildings across Houston with troubled loans, including the 1.3M SF TC Energy Center and the 608K SF One City Centre, both downtown. 

M-M Properties is the owner of TC Energy Center and owned the 1.2M SF 5555 San Felipe before lender Starwood Property Trust foreclosed on it in March. 

Not far away from One Riverway, the National Bank of Kuwait foreclosed on a 283K SF office building at 2425 West Loop S near The Galleria. Property ownership is linked to Houston-based real estate businessman Ali Choudhri, The Real Deal reported. The property is scheduled to be sold at a foreclosure sale on July 5, according to Harris County Clerk's Office records.