Appraisal cuts Lincoln Property Co tower’s value to below debt amount

The value of a distressed downtown Houston office building owned by Lincoln Property Company has taken a nosedive.

The 21-story tower at 801 Travis Street has an outstanding loan balance of $24 million, and a recent appraisal shows the building is valued at just $19.9 million, according to loan servicer notes, the Houston Business Journal reported. That’s less than half of its 2013 value of $43 million. At 222,000 square feet, the building’s valuation comes to less than $90 per square foot. 

In April, a Harris County court appointed Stuart Walker of Riverton RTS to appraise the property and act as receiver for its outstanding loan balance. The $30 million loan on the property, initially issued by JPMorgan Chase & Company in 2013 and now held by a CMBS trust, has been categorized as “matured, non-performing” since November. 

The office tower is also failing to hold onto tenants. Major tenants like Maryland-based KCI Technologies and Houston-based law firm Hogan Thompson Schuelke are relocating, which is expected to further impact the building. 

This situation is part of a broader trend of rising office loan defaults and vacancies around the country. Houston’s office vacancy rate climbed to 23.8 percent in June, the highest in the South, according to CommercialEdge. 

Servicer notes for 801 Travis revealed the building’s occupancy rate has hovered around 50 percent for the past several years, well below its underwritten rate of 81.6 percent. 

LPC Realty Advisors I LP, an affiliate of Dallas-based Lincoln Property Company, purchased the building from Atlanta-based Goddard Investment Group in 2015 on behalf of a pension fund client. 

In an attempt to attract new tenants and help improve its occupancy rates, Lincoln Property Company recently hired a new leasing management team. However, even with new tenants, the situation is unlikely to have an immediate impact on the building’s value. 

— Andrew Terrell

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