Foreclosed Houston office building draws no bidders besides lender
Pacific Life Insurance retained ownership of Four Westlake Park
A half-off discount didn’t attract a buyer for a Houston office building at a recent foreclosure sale, despite its location in a sought-after campus that’s seen a slew of lease signings this year.
Pacific Life Insurance regained ownership of the 20-story, 588,000-square-foot Four Westlake Park in West Houston’s Energy Corridor for its starting bid of $30 million, roughly one week after foreclosing on the property, Bisnow reported.
The California-based lender paid less than half of the $70 million loan it provided for Treeview Real Estate Advisors to buy the building in February 2020. The price also pales in comparison to the Harris Central Appraisal District’s $86 million valuation.
The building is part of the 53-acre Westlake Park, which houses BP’s North American headquarters. BP had leased Four Westlake Park before offering the entire building for sublease in July 2016; its lease expired in June.
Texas law mandates that lenders permit third parties to purchase the property at a public foreclosure auction, and lenders typically repossess a property when the auction doesn’t reach the minimum acceptable bid, real estate attorney Shams Merchant told the outlet.
“The lender can now turn around and sell the property in order to recoup some of their losses on the loan,” Merchant said.
The foreclosure wiped out any junior liens, so the lender can freely take back the property, unless it’s not the senior lienholder, he said.
Four Westlake Park’s significant drop in value sheds light on the struggles of Houston’s office sector, which is still reeling from stubborn remote-work trends, rising interest rates and a tight lending environment. About 23 percent of all office CMBS loans in Houston, totalling almost $973 million, are in distress, the outlet reported, citing a third-quarter report from Avison Young.
The beleaguered state of Four Westlake Park is somewhat surprising given the number of companies to sign leases in the Energy Corridor this year. In April, Technip Energies leased six floors of the 14-story West Memorial Place II building. Dutch geo-data company Fugro and Diamond Offshore Drilling leased a combined 138,000 square feet in the sprawling campus in the ensuing months.