919 Milam

Houston, TX

Historical Transaction

NRSF: 542,919
Acquisition Date: 10/27/2010
Total Capital: $55.7 million
Equity Invested: $20.0 million
Status: Sold
Realized Multiple: 2.4x
Realized IRR: 41%

919 Milam is a 24-story, 542,919 square foot Class B+ office building located in the heart of Houston’s Central Business District. 919 Milam, originally constructed in the 1950’s was comprehensively renovated in the early 1990’s, with subsequent partial renovations in 2000 and 2007. The property is home to The Coronado Club, Houston’s preeminent downtown social club which has been located on the fifth floor since the building’s construction and serves as an important amenity. Notably, the senior management of M-M Properties previously acquired, stabilized, operated, and sold the property (then known as Bank One Center) in the 1990’s and is intimately familiar with all aspects of the physical asset and its positioning within the marketplace.

Opportunity

  •  Opportunity to acquire the highest performing, best-located Class B+ asset within Houston’s CBD;
  • Purchase an established core-plus/value-add REO office  project from lender at a significant discount to replacement cost;
  • Leverage management team’s history with property to support expedited acquisition due diligence with all-cash purchase followed by financing post-close.
  • The LEED EB Silver certified building has efficient 22,500 square foot floor plates that make multiple leasing strategies viable.

Value Enhancement Strategy

  • Ownership implemented a leasing strategy that re-stabilized and subsequently raised occupancy from 76% to 94% upon sale.
  • Backfilled the majority of five floors (113,734 square feet) vacated by the U.S. Attorney’s office in July 2013;
  • Leveraged ownership’s previous direct experience with the property, significant Houston experience, and strong brokerage relationships to ensure successful lease-up and stabilization of 919 Milam;
  • Ownership completed more than $6.6 million in capital improvements to upgrade elevators, refinish exterior skin, and to enhance common areas as well as tenant specific suites.