River Oaks District fetches $550M-plus in cash sale

Customers shop at the Cartier store in River Oaks District. Customers shop at the Cartier store in River Oaks District. Photo: Jon Shapley, Staff Photo: Jon Shapley, Staff Image 1 of / 59 Caption Close River Oaks District fetches $550M-plus in cash sale 1 / 59 Back to Gallery

JPMorgan Asset Management has purchased Houston's posh mixed-use complex, River Oaks District, in a partnership with the property's developer, according to sources familiar with the deal.

The cash transaction was more than $550 million, according to a source, a high price for the Inner-Loop shopping, office and apartment development and one that demonstrates the resilience of Houston's retail market amid an economic slump due to collapsing oil prices.

While the city's office market has been hammered by energy's decline, retail real estate is still benefiting from population gains and lower gas prices, according to a recent report from CBRE Group, a commercial real estate firm.

"The sheer size of the market has captured the attention of retailers, placing Houston as their third most sought after market for expansion behind New York and Los Angeles," the report stated.

Still, CBRE warned that by the end of the year or early 2017, retail sales could soften as more high-paying jobs are lost.

OliverMcMillan, the San Diego-based real estate firm that developed River Oaks District, retained an ownership stake in the property and a management role in the partnership, sources said.

The seller was an entity including OliverMcMillan and Baupost Group, a Boston-based hedge fund. OliverMcMillan also had a $150 million loan on the property from Bank of America, according to property records filed in Harris County.

OliverMcMillan and JPMorgan declined to comment.

Such sales of properties aren't uncommon after the developing process is finished, said Ed Wulfe, longtime real estate developer and chairman and CEO of Wulfe & Co.

"It happens often and I think the bottom line is this is just ensuring the financial stability of the project with a major financial institution, which again protects the viability of the project," Wulfe said.

Those changes typically don't affect retail tenants. Essentially, a landlord change may be the only impact they'll experience, and in this case, the original developer is still involved the project.

River Oaks District spans 14 acres at 4444 Westheimer, just inside the West Loop. The project, some 10 years in the making, opened last fall with some of the world's top luxury brands, including Cartier, Dior, Hermes and Tom Ford. A slate of restaurants have or will soon open, including French bistro Toulouse Café and Bar, Taverna, Steak 48, Le Colonial and Hopdoddy Burger Bar from Austin.

Several River Oaks District retailers and their representatives contacted by the Chronicle declined comment on the purchase.