Parkway Sells 46-Story San Felipe Plaza At A Discount
Parkway Property Investments has sold the 46-story San Felipe Plaza building in Tanglewood after nearly two decades of ownership.
Orlando-based Parkway sold the nearly 1M SF, Class-A office tower to an affiliate of New York-based investment firm Sovereign Partners last month, public records show. The building sold for just under $83M, well off the $156.5M Parkway paid for the tower in 2005, according to real estate database Reonomy. Parkway Managing Director of Investments Christopher Wang emailed Bisnow April 3 to say the building had actually sold for $104.5M, though he did not provide documentation.
SF Plaza LLC, an entity created in January and registered to Sovereign Partners co-founder and principal Cyrus Sakhai, was listed as the buyer in a Harris County transfer document recorded Feb. 22. Parkway had owned the building at 5847 San Felipe St. in the Uptown/Galleria submarket since August 2005.
Sovereign Partners is a real estate investment firm with interests in more than 6M SF of property, according to its website. Sovereign Partners secured a $62.25M loan for the purchase from a Delaware-registered LLC, according to Reonomy, which also indicates Parkway’s previous loan for the building was for $147.25M with Natixis.
San Felipe Plaza has 980K SF of rentable space throughout its 46 floors, according to its website. Amenities listed include a restaurant, catering, bank, dry cleaner, full-service fitness center and meeting and conference spaces. The website lists more than 400K SF of office space in the tower as available now.
Sakhai declined to comment when reached by phone and Parkway responded only to correct what it said was inaccurate sales price information found in the Reonomy database. Parkway has removed the property from its website and last promoted events at San Felipe Plaza in January.
Sovereign Partners focuses on acquiring “high-quality office, hospitality and residential assets” that have been impacted by factors including deterioration of the facility's market position, poor management and inefficiencies in capital markets, its website states. The firm works with “lenders who are willing to sell their interests at a discount.”
Tenants include energy research and consultancy company Wood Mackenzie, which is planning a $2.8M renovation of its 42K SF, two-story office space, according to Texas Department of Licensing and Regulation records. The project plans include replacing, updating or taking down a few walls and doors.
The records showed work starting in December and being completed in April, though that information is often preliminary and subject to change.
San Felipe Plaza was one of nearly 20 office buildings that Parkway owns and manages in Houston, and the only one not in a cluster. Parkway has 11 buildings in Greenway Plaza, four in CityWest Place in the Briar Forest submarket and three in Post Oak Central.
The price tag of $82.79M pegs the building at about $84.48 per SF, which is well below the average 2022 Houston office sale of $151 per SF, according to an Avison Young report. Parkway's reported price of $104.5M would mean the building sold for just under $108 per SF.
San Felipe Plaza was developed in the early 1980s by Houston multifamily mogul Harold Farb, according to Realty News Report. Farb completed the building when the Houston economy was in a “deep valley," and Farb told reporters at the time he was losing $1M a month on the building.
The Houston office market is again facing a difficult time. Though Houston has one of the highest return-to-office rates in the country, it also has one of the highest vacancy rates at a record-high 23.2%, according to the Avison Young report. The San Felipe/Voss submarket office vacancy was 28.1% in Q4, the report states.
San Felipe Plaza is less than a mile down the street from 5555 San Felipe, previously Marathon Oil Tower. Starwood Property Trust bought that Class-A 1.2M SF building out of foreclosure last year.
Starwood is reportedly hoping to convert 5555 San Felipe to residential or sell it to a buyer that could make that conversion happen, The Real Deal reported.
UPDATE, APRIL 3, 11:45 A.M. CT: This story has been updated with sales information provided by a Parkway executive.