A nonperforming loan linked to Houston’s CityNorth office campus is up for sale, following an $80 million renovation completed less than a decade ago. The announcement was made on Apr. 14 by JLL’s Tom Hall in a LinkedIn post.
The offering involves a $75.8 million defaulted loan secured by three office buildings—CityNorth 2, 3, and 4—located at Northchase Drive, along with two retail buildings on a total of 23 acres in the Greenspoint neighborhood. According to Hall, the default amount equates to $72 per square foot and the property is currently 74 percent occupied.
JLL is marketing the note as a “deed-in-escrow” opportunity, which would allow buyers to quickly assume ownership from Lincoln Property Group. Hall and Kyle Kaminski are managing the listing process with bids due by May 12.
The collateral forms part of CityNorth’s six-building complex that previously housed ExxonMobil. Built in 1978, CityNorth underwent significant renovations concluding in late 2019, including new amenities such as a fitness center, conference space, and entertainment facility featuring a golf simulator.
In addition to this offering, another private equity group that owns the remaining portions of CityNorth is also seeking buyers. Colliers’ David Carter is handling listings for CityNorth buildings 1, 5, and 6—a move that follows earlier auctions for some properties within the complex initiated over a year ago by Lincoln Property Company.
The situation at CityNorth highlights ongoing challenges within Houston’s office market where vacancy rates remain high at approximately 27 percent. Falling values of distressed assets have opened doors for corporate tenants who find purchasing more cost-effective than leasing.
