Howard Hughes Lands $130M Refi for Houston-Area Office Tower

June 14, 2024

Office Featured Finance HoustonMoreNews Southwest

The deal addresses the firm’s largest debt maturity in the next two years.

Property at 9950 Woodloch Forest Drive, The Woodlands, Texas. — Howard Hughes purchased the asset in 2019 and subsequently relocated its headquarters there. *Image courtesy of CommercialEdge*

Howard Hughes Holdings Inc. has secured $130 million for the refinancing of 9950 Woodloch Forest Drive, a 601,000-square-foot Class A office building in The Woodlands, Texas.

The non-recourse note carries a five-year term and amortizes on a 30-year schedule, bearing a fixed-rate interest of 7.07 percent. Wells Fargo and Argentic Real Estate Finance originated the loan, public records show.

This refinancing amounts to 24 percent of the company’s 2025 maturities while simultaneously addressing Howard Hughes’ largest debt maturity in the next two years. Bank of America had issued the previous $137 million loan in 2020.

The company acquired the asset from Occidental Petroleum Corp. in 2019, as part of a $565 million portfolio deal. Following the purchase, Howard Hughes relocated its corporate headquarters to 9950 Woodloch Forest Drive from Dallas.

Howard Hughes CFO Carlos Olea said, in prepared remarks, that the office building was empty upon its acquisition but is currently 98 percent leased. Other tenants at the property include McKesson Specialty Health and Lancium Technologies Corp., among others.

An office high-rise near Houston

The high-rise at 9950 Woodloch Forest Drive rises 31 stories as part of The Woodlands Towers at the Waterway office campus. The 2014-built tower has floorplates of roughly 28,400 rentable square feet, floor-to-ceiling glass windows and column-free interiors.

Amenities feature an indoor sports court, a lobby café and custom art pieces, as well as a 33,000-square-foot rooftop terrace, to name a few. The property received LEED Silver, Energy Star and BOMA 360 certifications.

Interstate 95 is less than 1 mile from 9950 Woodlock Forest Drive, while downtown Houston is roughly 30 miles away. The Woodlands Mall, a 160-store shopping center, is within walking distance.

Houston’s high office vacancy rate

As of April, Greater Houston’s office vacancy rate stood at 23.6 percent, up 30 basis points year-over-year but down 70 basis points year-to-date, according to a recent CommercialEdge report. During the same interval, the national office vacancy rate climbed 160 basis points to 18.3 percent.

The metro had the highest vacancy rate in the Southwest as of April, followed by Austin (22.4 percent) and Dallas (21.1 percent), the same report shows.