Falcon Advises on Purchase of Major Houston Complex
Falcon Real Estate has completed the purchase of Westlake Three and Westlake Four, two major office buildings in the Energy Corridor in the western part of Houston, Texas. Westlake Three is a 19-story office building completed in 1983 on a 4.5 acre lot, which includes a seven-story parking garage. Westlake Four is a 20-story tower completed in 1992 on a 5.8 acre lot with a six-story parking garage. Together the two buildings have over 975,800 square feet of space (90,659 square meters).
The principal tenants in the two buildings are BP Corporation of North America, with close to 637,000 square feet and ConocoPhillips, with 242,000 square feet. The balance of the space is taken by New Era Life Insurance and Murphy Exploration. The existing leases have regular increases in net rents, and all tenants pay their pro rata share of operating expenses. Current rents were negotiated when oil prices were below $20 per barrel and are considerably below present market rental rates in the Energy Corridor. With the strong economy presently being enjoyed in Houston, rental rates are expected to continue to rise, particularly in that Corridor.
The two buildings were bought at a combined price of over $210 million, equal to a going-in capitalization rate of 6.5%. This price is also equal to approximately $215 per square foot. First mortgage financing was provided by Credit Suisse.