Arena Place Towers At 7324 Southwest Fwy.

[MontroseNeighborhoodCafe]

EXCLUSIVE REPORTS

From the December 10, 2004 print edition

Group pays $24.5 million for Arena complex with rowdy past

Jennifer Dawson

Houston Business Journal

A local partnership has purchased the Arena Towers and Arena Theatre with plans to increase the occupancy rates by making significant capital improvements in the properties with a checkered history.

Fred Schiller is general partner in the Arena Group, which bought the two office towers and circular theater from Miami-based Lennar Partners for roughly $24.5 million.

The acquisition includes two 19-story buildings, each with approximately 390,000 square feet of space; a 2,850-seat live performance theater; and two nine-story parking garages with a total of 2,200 spaces. The properties are located on the Southwest Freeway at Fondren.

The performance venue had been leased and operated for many years by H'Town Arena, which stopped leasing the facility days before the sale closed. Officials with the former theater operator could not be reached for comment.

"We're currently in negotiations with several major national venue operators who are very interested in leasing it," Schiller says.

The Class B office space in the two towers is approximately 70 percent occupied, with several large call centers as tenants.

PM Realty Group has been replaced by Transwestern Commercial Services in leasing and management of the property. Leasing will be handled by Michele Ellis-Felder and Clint Bawcom.

Coincidentally, Ellis-Felder used to lease the property roughly 12 years ago. She says finding tenants will be much easier now because construction on the Southwest Freeway has been completed and the buildings were renovated six years ago.

"There's just a whole new feel and look to the property," she says.

Towers of Powers

The office buildings were developed in the early 1980s by Mel Powers. They were constructed next to the theater, which was originally built in 1965.

Powers grabbed a lot of attention at the time by building a personal penthouse on top of one of the office towers.

Later, when the project went into foreclosure, he tried to homestead the whole tower as a residence.

"It was a pretty celebrated case," recalls Robert Williamson of Holliday Fenoglio Fowler, who with Jeff Hollinden represented Lennar Partners on the sale.

"This is a very storied project. He (Powers) was a very flamboyant developer," Williamson says.

New owner Schiller plans to spend an undisclosed but "significant" amount on further upgrading the appearance and functionality of the buildings.

"I'm very bullish on this area of town," Schiller says. "It's undergoing some major revitalization right now. I think it's an unbeatable location."

Lennar Partners had spent the last couple of years making improvements to the property as well, says Williamson of Holliday Fenoglio Fowler.

"We had incredible interest for the buildings," says Williamson, of the recent marketing push. "There was tremendous upside available to the buyer."

Tucker Knight of Holliday Fenoglio Fowler, who arranged financing for the buyer, says lenders also saw an upside even though the buildings did not have superior cash flow.

Citigroup Global Markets Inc. arranged a loan for 80 percent of the cost, and the buyer got a very low interest rate, he says.

"This building could be a home run for the current ownership," says Knight.

jdawson@bizjournals.com • 713-960-5935

[gwilson]

Hey guys,

I need to find some high res shots of the Arena Towers. I've tried Google Image Search to no avail, was hoping you guys might be able to help.

Thanks in advance.

[gwilson]

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