Galleria office building headed to auction after $13M default
Starwood Mortgage Capital initiated foreclosure on TCP Realty debt
A foreclosure auction has been scheduled for a Class-B Houston office building, spotlighting the growing wave of distress in the Bayou City.
Starwood Mortgage Capital has initiated foreclosure proceedings on the eight-story, 130,000-square-foot Spectrum Office Building at 5858 Westheimer Road in Houston’s Galleria area, Bisnow reported.
TCP Realty Services, led by CEO Robert Neely, acquired the property in 2003, and it serves as the company’s Houston office. The foreclosure action, scheduled for Feb. 6, stems from TCP defaulting on a $13.5 million loan issued in August 2013.
LNR is overseeing the loan as a special servicer, according to foreclosure documents.
Tenants at the site include a design-build firm, a law firm, a periodontist and a power company. The property was valued at $12 million a year ago by the Harris Central Appraisal District, the outlet reported.
This move by Starwood follows its foreclosure and seizure of Houston’s Marathon Oil Tower in 2022. Starwood CEO Barry Sternlicht wants to convert the 41-story building for residential use.
Houston’s office market has seen a handful of foreclosures since last year, including Four Westlake Park, which was seized by lender Pacific Life Insurance in October. The 283,000-square-foot office building at 2425 West Loop South, near the Galleria, also went into foreclosure last year.
The office delinquency rate in Houston is hovering above 13 percent, equating to about $555 million of delinquent CMBS loans, according to a fourth-quarter report by Savills.