16350 & 16360 PARK TEN PLACE – Houston, TX
Hicks Ventures bought these underperforming Class B office buildings, located in the Park Ten Place submarket, in late March 2012. The 142,000-square-foot project was 69 percent leased, with extremely unhappy tenants who had suffered through very poor ownership resulting in many negative issues with the buildings (such as insufficient HVAC, no janitorial service, poor plumbing, roof leaks and poorly maintained landscaping).
Hicks Ventures undertook a very aggressive redevelopment/repositioning plan that included constant/personal interaction with the tenants (that started well before closing) and a $1.6 million CapEx plan for the buildings that included: roof repairs/replacement; ADA/Fire Life Safety upgrades; parking lot replacements, repairs, restriping and the addition of carports; new landscaping; new HVAC; and total renovation of the outdated lobbies, entryways, restrooms and elevators, etc.
The results blew away our best-case range of our assumptions. The properties achieved a 92 percent leased level after only six months (our underwriting assumed NO positive leasing activity in the first six months, with a 24-month lease up after that). Our rental rate assumptions were $20/sf, and in the first year, we achieved on average $22.35/sf. And we took the average sized tenant in the project from 1,967 square feet at closing, to 4,888 square feet in just six months.
The project was refinanced in November 2013 (a 20-month period).