Three of Houston’s most prominent office developments are part of the 54 building office portfolio Morgan Stanley relinquished to the lender (Barclays Capital) as reported in the Wall Street Journal. The Houston properties including Greenway Plaza, Houston Center and Post Oak Central were part of Morgan Stanley’s $6.5 billion acquisition of Crescent Real Estate Equities in 2007.
According to the WSJ article, Barclays formed a joint venture with John Goff, co-founder of the firm that sold Crescent to Morgan Stanley in 2007. Mr. Goff now co-owns with the Barclays PLC unit a venture that will take control of more than 17 million square feet of office towers as well as investments in resorts and hotels.
Morgan Stanley’s decision to hand over Crescent’s holdings to Barclays “means that the value of the properties is below the debt, and Morgan didn’t think the value would come back up anytime soon,” said Cedrik Lachance, an analyst with Green Street Advisors Inc., a research and trading firm. A Morgan Stanley spokeswoman said the transfer was made “in exchange for a full release of liability on the loans.”
However, the Houston office assets, I would speculate were likely some of the most stabilized properties in the Crescent / Morgan Stanley portfolio, as the Houston office market has softened but not to the degree of other markets around the country. The Houston portfolio consists of 18 office buildings totaling 9,751,038 square feet.
- The 9.75 million square foot Houston portfolio currently reports an 89.1% occupancy rate as compared to 88.2% at the end of the first quarter of 2007
- Year-to-Date net absorption for the 18 building portfolio totals 203,425 square feet on the negative side of the ledger
Source: CoStar Group
Below is a detailed profile of the properties: