An office building owned by Unilev in Uptown Houston has narrowly avoided foreclosure for several months despite numerous filings that signaled a sale.
A substitute trustee has filed foreclosure notices with the Harris County Clerk on at least seven occasions since April of last year, indicating an intention to auction the 25-story building at 1 Riverway Drive, Bisnow reported. However, the foreclosure has yet to take place, and ongoing negotiations hint at a possible loan workout that could stabilize its financial situation.
The 482,000-square-foot building encountered financial difficulties in the summer of last year, when its $80 million loan, issued in 2015, was transferred to special servicing due to imminent default. The loan amount equates to $166 per square foot. The remaining balance is $69 million, or $143 per square foot.
The situation worsened in January when a law firm that leased 11 percent of the building’s space moved out. The next month, Unilev failed to make a debt payment to its lender, Deutsche Bank subsidiary German American Capital, and the loan became delinquent.
The lender filed the most recent foreclosure this month, but recent comments from the special servicer, LNR Securities Holdings, suggest that a resolution may be in sight, with loan renegotiation terms in the final stages.
“The Lender will continue workout negotiations with the Borrower while dual tracking foreclosure,” the comment says.
If the workout goes through, Unilev could avoid losing it to foreclosure.
It is not uncommon for foreclosures to be filed at the same time workouts are being negotiated, Morningstar Credit vice president Matt Bendzlowicz said.
Houston’s office market hit the lowest point since 2016 in the third quarter, with net absorption falling to negative 773,000 square feet, according to CBRE.
— Andrew Terrell
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