Nitya Capital Extends After $42M Default on Houston Office Building

Nitya Capital’s One Westchase Center has been transferred to special servicing after the firm defaulted on a $42.5 million CMBS loan, but that situation could be changing.

The loan was set to mature on Oct. 9, and Nitya agreed to refinancing terms, suggesting that it expected the loan would be paid in full by then.

However, recent comments from special servicer KeyBank suggest the property could be undergoing a fourth extension, according to Morningstar DBRS. Nitya confirmed as much.

“We’ve agreed on a two-year extension. No special servicer is needed,” Nitya said in a statement. “The asset is performing above projections operationally, and the need for [an] extension is simply due to capital markets pricing commercial assets differently.”

The 466,000-square-foot, 12-story Class A building is located at 10777 Westheimer Road at the intersection of Walnut Bend Lane.

Its assessed value has fallen more than 40 percent, dropping from $85 million in 2017 to $50 million this year.

This property saw its fair share of turbulence before landing in the hands of Houston-based Nitya. It was one of seven loans totaling $564 million, securitized against this and 29 other properties in October 2017.

One Westchase Center remains the only one not fully paid off, with an original loan balance of $47 million. Its original maturity date was in 2019.

The property’s former owner, Bahrain-based Investcorp, transferred ownership of the property to special servicing in 2020 due to the pandemic and approaching maturity date. Nitya Capital acquired the building from special servicing for an undisclosed amount in August 2020 before entering into a loan agreement.

Nitya extended its maturity date three times within two years due to the effects of the pandemic and economic downturn. The loan had a final maturity date of April 2023, but a modification was implemented, extending it to this month.

Conditions of that agreement included an increased interest rate, continued financial management by the lender and a $4.5 million reduction to the original balance upon closing. To make that reduction, Nitya agreed to pay an additional $4.5 million from new investments and existing reserves.

The building’s second-largest tenant, IBM, hasn’t renewed its 49,000-square-foot lease, which is set to expire in May, according to recent special servicer comments. The building’s other top tenants include BGE and EDG Engineering, and it is 100 percent leased.

Nitya Capital has a portfolio encompassing approximately $2 billion in real estate assets spread across the country. It primarily acquires and manages apartment complexes, most of them in Texas. The company has run into financial woes recently due to a debt crunch leading to the sale of nine Texas properties including five in Greater Houston.