Unilev’s $69 Million Balance on Houston Office Asset Coming Due

A ticking financial clock looms over a 25-story office tower in Houston’s Uptown area as landlord Unilev battles falling occupancy and a delinquent loan just weeks from maturity.

The loan, managed by Wells Fargo as part of a commercial mortgage-backed securities trust, is set to mature on March 1, leaving the owners of the building, One Riverway, less than 2 months to negotiate a restructuring, the Houston Business Journal reported.

Los Angeles-based Unilev, led by co-founder and managing partner Raymond Levy, is facing potential foreclosure due to delinquency on a $69 million loan balance. The original $80 million loan ($166 per square foot) secured in 2015, was transferred to special servicing in the summer of 2023 after occupancy dipped below 65 percent.

A substitute trustee has filed at least seven foreclosure notices with the Harris County Clerk since April 2023, signaling intentions to auction the 482,000-square-foot property. However, the foreclosure has not occurred, and ongoing negotiations suggest a possible loan workout to stabilize the building’s financial situation.

The financial strain intensified last February, when law firm Thompson, Coe, Cousins & Irons exited 41,000 square feet, or 11 percent of the building’s space. Subsequently, Unilev missed a debt payment to its lender, Deutsche Bank subsidiary German American Capital Corporation, that same month, rendering the loan delinquent.

That also followed the departure of accounting firm Doeren Mayhew, which relocated to 2600 North Loop West in 2021. Over eight years, the building’s occupancy plummeted 42.7 percent, dropping from 89 percent in 2015 to just 51 percent at the end of 2023.

Remaining tenants at the property include Texas Financial Group, which recently renewed its lease but reduced its space from 39,800 to 29,900 square feet.Wright & Close and Commonwealth Project each occupy over 20,000 square feet.

One Riverway’s struggles mirror wider challenges in Houston’s office market, which recorded its lowest transaction volume in nearly a decade during the third quarter, along with a net absorption of negative 773,000 square feet, according to CBRE. During the quarter, Houston’s office vacancy rate was 26.8 percent, up from 26.4 percent year-over-year.

— Andrew Terrell