HOUSTON – A compelling investment story can be told in Energy Capital of the World, even with oil at $50 a barrel, says Martin Brühl, the German investment manager who just engineered one of the biggest deals in Houston’s real estate history.
Brühl says Union Investment is not stopping with the Houston trophy. It is looking for more investments in the Lone Star State.
A number of investors shied away from Texas after West Texas Intermediate crude dropped in a free-fall from $108 a barrel last summer to under $50 in early 2015.
But after studying the Houston economy and the oil crunch, Brühl, head of international investment management at the Hamburg-based investment firm, pulled the trigger on the $440 million purchase of the 36-story 1000 Main building in downtown Houston.
“As an investor from a non-oil producing country, Germany, we looked at this very carefully,” Brühl says. “We did a lot of research. We got a lot of expert advice. We really dissected the oil industry – upstream, midstream, downstream.”
At the 11th hour, La Salle, the top bidder for the 836,000-square-foot tower, dropped out when the energy industry cast uncertainty over the Houston market.
So Union Investment immediately stepped to the plate, closing the deal on March 31.
“We got comfortable in Houston. We were comfortable that compared to the 1980s, Houston is far more diversified and far more robust and a sound place to invest in. Yet, it is the Energy Capital of the World. But it’s diversified,” Brühl says.
Brühl said Union Investment, which was advised by Metzler Real Estate of Seattle, had been pursuing a more diversified investment strategy. Rather than continuing to place some of its 26 billion-Euro in realty funds in buying trophy buildings in the traditional gateway cities on the East and West coasts, Bruhl says Union began looking for deals in so-called secondary markets.
Union recently acquired the Research Park Plaza 3 and 4 buildings in Austin and the Target headquarters tower in downtown Minneapolis.
The non-gateway cities of America offer good prices and value to investors and the opportunity to tap into strength of regional economies. Union is reassigning underwriting staff from Singapore to New York to assisting in the American focus.
CBRE’s Russell Ingrum, Bernard Branca and Jared Chua represented the seller of 1000 Main, Invesco Real Estate, a Dallas firm that bought the Houston tower in 2012 for $355 million.
“Union Investment’s purchase is a clear vote of confidence in the long-term economic prospects of Houston,” says Branca.
And through it all, – Brühl has become a big fan of the Lone Star State. “I believe in Texas as a state. It’s a power house, “ he says. “It’s an outperformer.”