CPS Energy has sold one of its surplus downtown properties, a 10-story office building and parking garage on the River Walk, to a commercial real estate firm from Los Angeles that specializes in buying assets quickly and with cash.
The city-owned utility sold the building, 146 Navarro St., on Feb. 5 to BH Properties for $22.3 million, according to county property records and information provided by CPS Energy spokeswoman Nora Castro. The Bexar Appraisal District assessed the property at $24.1 million last year.
The building is one of six downtown properties that CPS Energy decided to put up for sale in fall 2018 to help offset the $210 million price tag for the renovation of its new headquarters at 500 McCullough Ave. The utility moved into the new headquarters in November, CPS Energy spokeswoman Melissa Sorola said.
The other properties for sale include the utility's former headquarters at 145 Navarro St., the surface lot next to the Mexican Consulate across the street, and the UFO-shaped Villita Assembly Building at 401 Villita St.
Last March, CPS Energy said it had selected a buyer for several of the properties, including the ones at 145 and 146 Navarro, which are connected by a skywalk, according to media reports. The utility's board of trustees gave CEO Paula Gold-Williams the go-ahead to begin negotiations.
The utility did not say at the time who the potential buyer was, but it must not have been BH Properties, because Andrew Van Tuyle, the company's senior managing director of investments, said in a phone interview that BH Properties only began talking with CPS in December.
CPS Energy declined on Thursday evening to provide more information on what happened with the negotiations which were reported on in March, after being sent questions Wednesday afternoon.
"It actually happened pretty quick," Van Tuyle said of the negotiations. The transaction was all-cash, he said.
BH Properties' technique of buying with cash has put it in a strong position during the pandemic, Van Tuyle said. The collapse of the hotel and office markets has made it extremely difficult to arrange financing for acquisitions and construction, a trend which has derailed local projects such as Zachry's plans for the northwest corner of Hemisfair.
"We set ourselves apart from a lot of other real estate groups because we don't have any outside investors," Van Tuyle said. "We buy all-cash and then sort of figure out our financing later… In this particular situation I think we closed like three and a half weeks from start to finish, which is really rare in the industry to do it that quick. It's unique in the marketplace to be able to do that."
There were multiple bidders for the 146 Navarro property, Castro said in an email.
"We will be able to disclose more information about each of the other surplus properties as their sales become final," she said.
Van Tuyle said that it is his understanding that the 145 Navarro building and the surface lot by the Mexican Consulate are under contract to other buyers.
All in all, CPS Energy is selling 10.5 acres of property. In 2016, the utility bought two 35-year-old towers at 500 McCullough with plans to reduce them to their steel structure and renovate them into a state-of-the-art new headquarters with 430,000 square feet of space by 2019.
The 146 Navarro building includes three stories of offices, with about 100,000 square feet of space, atop a parking garage with 605 spaces, Van Tuyle said. The property appealed to BH Properties because of its frontage on the River Walk, the beautiful views from its offices, and its abundance of parking, which is all-too-rare downtown. The company plans to open up the parking for daily use, he said.
"The vast majority of downtown San Antonio is, I would say, under-parked. You have a lot of hotels and office buildings that just don't have enough parking to be able to offer their tenants or visitors so they have to find parking other places," he said. "We can offer something to the market which really truly doesn't exist."
BH Properties plans to give the building a "facelift," including a paint job and updates to its lighting and common areas, he said. The building has long been occupied by CPS Energy since it was constructed in the late '60s.
The building is the only property that BH Properties currently owns in San Antonio, but the company plans to expand in the market, Van Tuyle said.
"San Antonio, we really like that market," Van Tuyle said. "We hope to do more soon in that market. We hope to build a nice little portfolio in San Antonio and Texas altogether over the next couple years."
» CPS Energy chooses bidder for former HQ and other downtown properties (San Antonio Express-News, March 30, 2020)
» CPS Energy selling six downtown properties (San Antonio Heron, Sept. 25, 2018)