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Poster child for Houston office distress hits market

801 Travis Street made waves when its appraisal dipped below loan value

<p>Lincoln Property co-CEOs Clay Duvall and David Binswanger along with 801 Travis Street (Getty, Lincoln Property, Google Maps)</p>

Lincoln Property co-CEOs Clay Duvall and David Binswanger along with 801 Travis Street (Getty, Lincoln Property, Google Maps)

A poster child for Houston’s office woes has hit the market. 

An affiliate of Dallas-based Lincoln Property Company listed the 21-story building at 801 Travis Street, which made news this summer when its valuation dipped below its loan value. JLL is marketing the property. 

The building in Houston’s central business district is just 43 percent occupied, according to the listing. It’s being marketed as a value-add investment property. 

The property has been half vacant for years, the Houston Business Journal reported this summer, but another major tenant, Maryland-based KCI Technologies, left in October. It had occupied 15,000 square feet. 

As of July, the property had a loan balance of $24 million; a recent appraisal valued the 222,000-square-foot building at $19.9 million, which comes out to less than $90 per square foot. The recent valuation is less than half the building’s 2013 value of $43 million. 

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The property’s loan has shown up on servicer watchlists since 2016, the report said. After the loan matured in November of last year, a receiver was appointed. In the meantime, the owner has been trying to increase occupancy.

The building last traded hands in 2015 when Lincoln bought it on behalf of a pension fund client from Atlanta-based Goddard Investment Group. 

It was built in 1981 and renovated in 2014. 

The financial woes of 801 Travis Street are emblematic of Houston’s struggling office market, which has an overall vacancy rate of 24.9 percent, according to Partners. The high rate can be attributed to low occupancy in older buildings like this one, as tenants downsize or flock to newer properties with better amenities. 

However, the distress listing may also reflect that the recent reduction in interest rates could give owners of distressed properties more exit options.

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