Interra Buys 600 KSF Houston Landmark Through Foreclosure

Interra Capital Group has purchased The Esperson Buildings, two historic office properties in downtown Houston totaling 600,000 square feet. The company bought the assets following foreclosure, with Metropolitan Life Insurance Co. having held the mortgage.

Interra paid $12 million as the highest bidder of the foreclosure sale, Harris County public records show. The seller was Contrarian Capital Management, which owned the iconic pair of buildings since 2012, according to CommercialEdge. The original note, totaling $52.8 million, was issued in 2018, then amended in 2022 and reduced to a $41 million loan.

The process was led by Cameron Management, which will continue to act as property manager for a designated period.

A Houston landmark

The office complex includes two buildings completed in 1925 and 1941, respectively, both designed in the Italian Renaissance and Art-Deco architectural styles. Their façades feature terracotta details, cornices and columns.

The Niels Esperson Building rises 32 stories and The Mellie Esperson Building was constructed as a 19-story annex. Notable interior features include move-in ready coworking spaces, 14 passenger elevators, 31,500-square-foot floorplates, 586 vehicle parking spots and 12,609 square feet of first-floor retail.

Amenities include a conference center, on-site property management, a food court with multiple restaurant options, health-care, beauty and spa venues, 24-hour security and visitor valet parking services. Amegy Bank, Cameron Management, Impact Hub Houston, The Cannon, MV2 Insurance Solutions, Kerrco Inc. and Sarita Energy Resources are among the tenants, according to CommercialEdge.

The Esperson Buildings are close to downtown Houston, with multiple bus and light rail stops nearby. The location is 11 miles from William P. Hobby Airport and within 20 miles of George Bush International Airport.

Office investment activity in Houston

Office loan defaults and delinquencies are on the rise in 2024, with $1.87 billion in recently delinquent notes as of June, a recent CommercialeEdge report shows. The sector’s delinquency rate reached 7.5 percent, marking a 4.5 percent increase year-over-year.

Even with discount purchases on the rise, Houston’s office investment volume remained steady, with assets changing hands for a total of $451 million year-to-date through June. The amount pushed the metro among the nation’s top 10 leaders in office investment, while ranking third among Southern markets, after Dallas-Fort Worth ($510 million in sales) and Washington, D.C. ($1.3 billion).