Prime Austin real estate changes hands as Related Cos. buys South Congress site – The Business Journals
The Related Companies LP is the new owner of 500 S. Congress Ave.
A bankruptcy judge on Sept. 15 approved Related’s bid to purchase the site once owned by World Class Holdings, Nate Paul’s embattled Austin real estate investment firm, for $65 million, provided it closed on the deal by Sept. 30 — and Related pulled through.
The New York-based company closed on the purchase on the morning of Sept. 28, according to a report of sale closing.
The six-acre site along South Congress is home to two commercial buildings with more than 70,000 square feet of office space, along with apartments, according to bankruptcy documents. It also houses a longtime bar called Ego’s.
Mike Iannacone, executive vice president at Related Cos. and the company’s top local official, said Sept. 16 it was “too early to tell” what Related might ultimately do with the site, but noted it will likely be “a vertical mixed-use development of some sort.”
In August, World Class appeared close to retaining the property by buying it out of bankruptcy for $95.1 million through a holding company called Rising Tide Investments LLC. But Rising Tide declined to close on the sale, it was revealed in late August.
The backup bidder, NIA ATX LLC, then attempted to extend a deadline for closing on its own $95 million bid for the property, opening the door for Chapter 7 Trustee Randolph N. Osherow to pursue overtures from other qualified bidders, which is where Related entered the scene.
On Sept. 26 the bankruptcy court held a hearing on a motion for stay filed by NIA ATX, but the motion was denied.
Who gets paid?
The $65 million used to close the sale will be divided into several shares, according to the report of sale closing.
The senior secured lender, New York-based Kennedy Lewis Investment Management, gets about $47.8 million.
Travis County was paid about $1.1 million for allowed 2021 taxes with an additional $705,063 reserved for proration and reconciliation of 2022 ad valorem taxes as of the closing date.
The trustee’s sales agent will receive a court-ordered 1% commission of $650,000.
The estate receives $14.9 million.
Related’s Austin plans
The New York developer is also making progress with a 15-story office tower proposed near Lady Bird Lake, which it announced Sept. 9.
Related on Sept. 20 filed a site plan application for the tower under the project name Lady Bird Lake. The tower is set to rise at 151 S. First St., next to The Catherine apartment tower and the Hyatt Regency Austin.
Civil engineering and consulting firm GarzaEMC is listed as the applicant on Related’s site plan application. ABJ previously reported that the tower, which is expected to break ground in late 2023 and be completed in 2025, was designed by architecture firm Kohn Pedersen Fox Associates, or KPF.
Iannacone confirmed Sept. 28 that other companies working on the project include TBG as landscape architect, Blum Engineering as engineer and Thornton Tomasetti as structural engineer.
Iannacone noted that Related has not yet selected a general contractor for the project but declined further comment.
Related is partnering with Austin-based family office Christopher Investment Company on the project, which will include 475,000 square feet of office space and 16,700 square feet of ground floor retail on a 3.3-acre site.
Related also wants to develop a five-story office building at 901 S. Congress Ave.
That project was designed by Gensler, and will feature 106,854 square feet of office space. There will also be space for a retail or restaurant tenant on the ground floor. The development would be Related’s “first-ever sustainably forested mass-timber construction,” according to an announcement. Other buildings that have used the construction method in Austin include T3 Eastside, 901 East Sixth, the Juno modular apartments and Hotel Magdalena, according to the Austin Towers blog.
This story has been updated with the correct spelling of Kohn Pedersen Fox Associates.