By Keith Loria, Contributing Editor
Houston—On behalf of an international investor, JLL’s Capital Markets team has secured $450 million in financing to recapitalize Chase Tower and Chase Center, two Class A office properties located in downtown Houston.
At 75 stories, Chase Tower is Houston’s tallest building and combined with the 20-story Chase Center totals approximately 2.4 million square feet. The buildings are connected by an underground pedestrian tunnel.
“Chase Tower is one of the most iconic office buildings in Houston and ownership has continued to invest significant capital in order to allow the building to maintain its Class A+ status,” John Ream, JLL senior vice president, told Commercial Property Executive. “Tenant demand at the buildings has historically been strong and continues to be as companies want to be located in a prominent building with direct access to the Houston tunnel system.”
MetLife provided a fixed-rate senior mortgage while J.P. Morgan provided mezzanine financing for a term of 11 years. The mezzanine loan has a floating interest rate for the first year and then converts to fixed-rate for the following 10 years. Sustained low interest rates continue to power the capital markets both nationally and in Texas.
“Interest rates remain near historic lows so it makes a lot of sense for owners with a long-term hold strategy to lock in a low interest rate now,” Ream said. “Energy concerns have made capital sources more selective when evaluating Houston opportunities, but well located, quality assets with diversified rent rolls are still getting a lot of interest.”
Chase Tower includes office and retail space and a sky lobby observation deck, while Chase Center includes office and retail space and a parking garage.
According to Ream, the buildings have always benefited from providing tenants easy access to the downtown area.
“However, Houston’s CBD has recently undergone a major transformation which has increased the buildings’ appeal,” he said. “Most notably, the revitalization of the adjacent Market Square with new restaurants and high-end multifamily has been a big positive for Chase Tower and Chase Center.”