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Galleria office building headed to auction after $13M default
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Expansive faces foreclosure at downtown Houston office building
Coworking firm defaulted on $7.1M loan from RGA Reinsurance
A photo illustration of Expansive CEO Bill Bennett along with 405 Main Street in downtown Houston (Getty, LinkedIn/Bill Bennett, Google Maps)
Mounting office distress rang alarms in Houston last year, and foreclosures are coming.
Missouri-based lender RGA Reinsurance Company has filed to foreclose on the 76,000-square-foot Scanlan Building, at 405 Main Street, in downtown Houston, Bisnow reported.
The property owner, an LLC tied to coworking firm Expansive, defaulted on a $7.1 million loan that RGA issued in October 2018. The loan matured on Nov. 1, according to the filing. The building will be up for grabs at Harris County’s March foreclosure auction.
Under its Level Office brand, Expansive acquired the property in 2015 and performed an extensive renovation in 2016 to meet modern office needs. The project transformed three floors of the building into an amenity-rich workspace, including a lounge area, chef-inspired kitchen and conference facilities.
Expansive had been marketing coworking space in the building prior to foreclosure proceedings.
Expansive’s financial struggles extend beyond Houston, reflecting broader challenges in its portfolio. Last year, the company defaulted on a $65.4 million loan for a 193,000-square-foot office building in Washington, D.C., resulting in a foreclosure auction at which the property sold for a fraction of its value.
Moreover, Expansive surrendered a 31,000-square-foot office building in Chicago’s River North neighborhood earlier this year. In Denver, the company faced similar challenges, with lenders moving to foreclose on one of its properties.
The company has 45 locations across the nation, including three in Houston, the outlet said.
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The Scanlan Building, named after former Houston mayor Thomas Howe Scanlan, became the largest building in Houston upon completion in 1909. Designed by architect Daniel Burnham, the building’s 11 stories challenged the then-prevailing 10-story limit set by local mogul Jesse H. Jones.
—Quinn Donoghue