BLVD Place is being sold in $205M deal
Real estate investment trust is buying the shopping and office complex along with a suburban Dallas property
A Houston real estate investment trust is making a mammoth acquisition of two Texas properties, including BLVD Place, the Whole Foods-anchored shopping and office complex on Post Oak Boulevard.
A Houston real estate investment trust is making a mammoth acquisition of two Texas properties, including BLVD Place, the Whole Foods-anchored shopping and office complex on Post Oak Boulevard.
Whitestone REIT, owner of community shopping centers primarily in Texas and Arizona, said Wednesday that it will spend $204.6 million for the posh Uptown property, along with Eldorado Plaza in the Dallas suburb of McKinney.
The sale of BLVD Place is the latest blockbuster deal involving one of Houston’s high-profile mixed-use developments.
Earlier this year, the owner of the iconic Greenway Plaza and neighboring Phoenix Tower announced plans to sell nearly half of its interest in those properties to a group of institutional investors for $512.1 million.
Last summer, JPMorgan Asset Management acquired River Oaks District, an upscale development home to some of Houston’s top luxury retail brands, for more than $550 million.
The acquisition of the 216,944-square-foot BLVD Place will come with 1.43 acres of land where Whitestone plans to build a six-story building with 46,000 square feet of retail space on the first two floors and 91,000 square feet of office space on the
top four. The company estimates the development cost will be $45 million. Whitestone officials could not be reached Wednesday.
Jason Gaines, a senior vice president with NAI Partners, said real estate investment trusts have been eyeing high-end urban assets — sometimes referred to as “core plus” — to add to their portfolios.
“These inner-city mixed-use deals are pretty coveted,” Gaines said. “It’s a strong play for them.”
Just down from the Galleria at the corner of San Felipe and Post Oak, BLVD Place is owned by a fund managed by Bailard of Foster City, Calif. The project’s developer, Ed Wulfe of Houstonbased Wulfe & Co., said the company is under a confidentiality agreement and that no deal had been finalized. Bailard could not be reached.
The first phase of BLVD Place was completed in 2009. In 2012, Apache Corp. acquired about 6 acres of the land to build an office tower but has yet to construct anything on it.
Gaines said Bailard is likely selling BLVD Place because it was always its intention to do so or it was part of an investment fund that has run its course.
“It’s not any sort of distress,” he said.
Whitestone noted in announcing the deal that average household income within a fivemile radius of both BLVD Place and the McKinney property is $124,000.
In its announcement Wednesday afternoon, Whitestone said it is negotiating financing terms with potential lenders to fund a portion of the BLVD Place purchase price with $80 million in mortgage financing.
In McKinney, El Dorado Plaza is home to national companies and regional branch offices, including Coca-Cola Co., Wells Fargo, Pizza Hut, Hilton Hotels, NexBank, iHeart Communications and Mary Kay Cosmetics.
The property contains 221,577 square feet of space, and White- stone will have the option to purchase an additional 1.86 acres that would allow it to build about 24,000 square feet of additional space. Eldorado Plaza is 97 percent leased, and Whitestone expects to fund a portion of the purchase price with borrowings under its unsecured revolving credit facility.
Both properties are expected to close next month.
Whitestone, which was founded in 1998 and had its initial public offering in 2010, owned 55 properties as of the end of 2016. The company, formerly known as Hartman Commercial Properties REIT, made $8.1 million last year on revenue of $104.4 million.
The BLVD Place acquisition is Whitestone’s 28th property in the Houston region.
Whitestone stock closed at $14.25 Wednesday, down 15 cents, before the deal was announced. The company also said it is offering 8.1 million shares.
Proceeds will be used to repay a portion of the company’s debt under a revolving line of credit that will then allow Whitestone to borrow to fund a portion of its pending acquisitions.