Woodbranch Management lost this game of musical chairs.
After a lender repeatedly failed to sell two distressed office buildings in San Antonio’s Medical Center, a federal bankruptcy judge has ordered the landowner to take control of the distressed property.
Houston-based Woodbranch is now the court-appointed owner of Highpoint Tower I and II at 8401 Datapoint Drive, the San Antonio Express-News reported. Woodbranch already owned the land beneath the buildings, and a lack of interested buyers has forced the firm to assume the site.
An LLC tied to Georgia-based Richmond Honan, defaulted on a $51 million loan from Capital One and filed for bankruptcy in August 2022. The Richmond Honan venture also owes roughly $1.4 million to specialty finance company First National Assets.
Capital One tried to sell the buildings three times but was unsuccessful, highlighting the historically low demand for office space amid pandemic-fueled remote work trends, which have caused vacancy rates to soar. Hiked interest rates and a tight lending climate have compounded office woes this year.
A buyer would have to pay at least $30 million for a sale of the Northwest Side property to go through, according to a sales procedure document filed earlier this year. Capital One does not intend to submit a credit bid to acquire the site itself.
“Despite months of marketing efforts, no viable third party bidder has appeared for a sale of the debtor’s interests under the ground lease and related assets,” attorney Robert Harris told the outlet.
Woodbranch’s lawyer, Jeff Carruth, said one bidder came forward with a $1.5 million cash offer for the property and pledged to cover approximately $2 million in property taxes.
The two buildings have a combined value of over $38 million, according to the Bexar Appraisal District. While there has been some improvement in rental income, with over $220,000 reported in the August monthly operating report, a year-to-date net income loss of $14.6 million remains, the outlet reported.
A motion to dismiss the bankruptcy case is scheduled to be heard in November, and the property is currently being marketed by Newmark.
—Quinn Donoghue
Read more
Commercial
Texas
Brass defaults on $57M office building loan
Commercial
San Antonio
RBL defaulting on $15.3M loan tied to McAllister Plaza office building
Commercial
Texas
Embassy Suites hits foreclosure auction