A nonperforming loan connected to Houston’s CityNorth office campus is now on the market, following an $80 million renovation completed less than a decade ago. JLL announced on Apr. 14 that it is marketing the $75.8 million defaulted loan, which covers a 1 million-square-foot section of the property.
JLL’s Tom Hall said in a LinkedIn post that the loan amounts to $72 per square foot and is backed by three office buildings—CityNorth 2, 3, and 4—as well as two retail buildings located at Northchase Drive in Houston’s Greenspoint neighborhood. The portion of the property tied to this loan is currently 74 percent occupied, according to Hall.
The offering is structured as a “deed-in-escrow” opportunity, allowing buyers to quickly take control from current owner Lincoln Property Group. Hall and Kyle Kaminski are managing the listing with bids due by May 12.
The collateral forms part of CityNorth’s six-building campus, which was originally built in 1978 and once served as ExxonMobil’s home base. Renovations completed in late 2019 included upgrades such as a new fitness center, a large conference facility, and an entertainment area featuring a golf simulator.
In addition to this sale process, another private equity group owning other parts of CityNorth is also seeking buyers for those assets. Colliers’ David Carter has listed CityNorth buildings 1, 5, and 6 for sale; these properties were previously offered at auction by Lincoln Property Company last year with starting bids at nearly $1.9 million and $2.4 million respectively.
The situation at CityNorth highlights ongoing challenges in Houston’s office sector where vacancy rates remain high and declining values are creating opportunities for companies looking to purchase rather than lease their space.
