Howard Hughes Corp. Lands $137M Loan for Houston Asset

The Woodlands Towers at The Waterway. Image courtesy of The Howard Hughes Corp.

The Howard Hughes Corp. has secured financing for 9950 Woodloch Forest Drive, one of the two trophy office towers within the 1.4 million-square-foot campus known as The Woodlands Towers at The Waterway in The Woodlands, Texas. The company closed on a $137 million loan for the 595,000-square-foot Houston-area building.

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The new financing for 9950 Woodloch, a 31-story structure built in 2014, comes three months after Howard Hughes acquired The Woodlands Towers, formerly the Anadarko Petroleum Corp. headquarters, from Occidental Petroleum Corp. in a $565 million deal. In addition to The Woodlands Towers, the transaction included the 125,000-square-foot The Woodlands Warehouse, 9.3 acres of developable land in The Woodlands Town Center and Occidental’s 1.3 million-square-foot Century Park campus in the West Houston Energy Corridor. To help fund the purchase of The Woodlands Towers and the warehouse, Howard Hughes had relied on a $343.8 million bridge loan with a maturity date of June 30, 2020. Approximately $63.5 million of the new financing, which features a five-year term and interest-only rate of LIBOR +1.95 percent, will be utilized to repay the property’s allocation of the bridge loan.

Leasing boost

The remaining portion of the proceeds from the financing will serve as “good news” money for leasing activity at 9950 Woodloch. Presently, the building is 35 percent leased to Western Midstream Partners LP, which signed a lease agreement for roughly 134,000 square feet earlier in March, and Howard Hughes Corp., which expects to relocate its corporate headquarters to the tower from Dallas later this year as part of its new reorganization strategy.

The Greater Houston office market was on a bit of an upswing at the close of 2019, with the year-over-year vacancy rate having decreased a bit to 19.3 percent and annual positive absorption having increased to approximately 1.6 million square feet, according to a fourth quarter report by Colliers International. Conditions in The Woodlands were even better. The vacancy rate for Class A product in the submarket was just 8.8 percent in the fourth quarter of 2019 and positive net absorption totaled approximately 357,000 square feet for the year.