Investments

REALIZED INVESTMENT

  • 1.2 million sq. ft. Class A office complex in the Galleria submarket
  • Ideally located with superior access to three major highways, US 59, the 610 West Loop and the Westpark Tollway
  • Adjacent to The Galleria Shopping Center, Houston’s premier shopping destination

Case Study

Investment Thesis
Capitalize on significant upside potential of this Class A property re-acquiring the asset, which Crocker Partners sold in 2005. Acquisition was made at a time when perceived market risk, due to a pending 50% anchor tenant lease expiration, had substantially driven down pricing. Crocker Partners accurately assessed the rollover risks and leveraged its historical knowledge of the asset and prior relationships with the existing tenants to capture rent and revenue growth. This included renewing anchor tenant Bechtel at terms well above the pro forma, and replacing a one-level parking deck with a 10-story parking garage, freeing up a 4-acre development site for sale.

Description
-1.2 million sq.ft. office complex, 89% leased to a diverse roster of tenants
-Average in-place rents at acquisition: $4.50/square foot below market rents of $16.50/sq. ft. NNN
-Acquired at 49% of replacement cost and a 7.3% cap rate

Value-Added Opportunity
-Renewal of anchor tenant on a long-term basis added significant value
-Sale of a development parcel which was not factored in the base case analysis generated $29.8 million

Return Metrics
The leveraged Gross IRR was a 67% and 5.2x multiple