Howard Hughes Corp. Lands $250M Loan for Trophy Tower

Proceeds will be used to bolster the liquidity position and invest in master-planned communities.

1201 Lake Robbins, The Woodlands, Texas
1201 Lake Robbins. Image courtesy of The Howard Hughes Corp.

The Howard Hughes Corp. has obtained financing for the office building at 1201 Lake Robbins Drive, one of two structures that comprise The Woodlands Towers at the Waterway near Houston in The Woodlands, Texas. HHC secured a $250 million, interest-only loan for the 806,000-square-foot office tower.

The new financing for 1201 Lake Robbins came in the form of a non-recourse, 10-year loan bearing an interest rate of 3.827 percent for the full term. HHC plans to use the proceeds to further enhance its strong liquidity position and continue investment in the company’s core master-planned communities.

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“Right now, we’re blessed with great net immigration to our MPCs. We are blessed with great demand for more amenities, more commercial assets that we have been able to execute in delivering on outsized risk-adjusted returns,” David O’Reilly, CEO of the Howard Hughes Corp., said during the company’s second quarter 2021 earnings call on August 5, 2021.

HHC has counted 1201 Lake Robbins, a trophy office asset originally developed in 2002, as part of its portfolio since December 2019, when the company acquired the 1.4 million-square-foot The Woodlands Towers at the Waterway and a 1.3 million-square-foot office campus in Houston from Occidental Petroleum Corp. for $565 million. 1201 Lake Robbins carried an individual price tag of approximately $203.5 million in the transaction, the terms of which allowed Occidental to leaseback the entire 30-story high-rise formerly known as Anadarko Allison Tower through 2032.

The Woodlands Towers at the Waterway have proven to be a solid resource for securing financing for HHC. In April 2020, the company closed on a $137 million loan for the 595,000-square-foot office structure at 9950 Woodloch Forest Drive, the second office building at the two-building complex.

The financing fountain gushes again

HHC did not disclose the source of the loan for 1201 Lake Robbins; however, the company may very well have found the capital markets to have been just as welcoming as they were before the new normal.

“The composition of lenders in the U.S. commercial mortgage market has largely returned to its form before the COVID-19 crisis struck,” according to a second quarter 2021 trends report from Real Capital Analytics.

CMBS originators captured an 18 percent share of the commercial mortgage market in the second quarter, after having captured just a 1 percent share of lending in the second quarter of 2020. Investor-driven lenders also saw their market share go on the rise, taking 15 percent of the conventional loan market compared to just 6 percent one year ago.

Notable office financing transactions over the last few months include the Swig Co.’s $190 million refinancing deal for 633 Folsom St., a 271,000-square-foot San Francisco tower that recently underwent a comprehensive renovation and expansion. Fortis Property Group also obtained $188.1 million in financing for the 1.3 million-square-foot Chase Tower in Dallas.

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