A bankruptcy judge has authorized the sale of the Lone Star Brewery complex south of downtown to a local developer for $14.45 million.
The deal between the brewery’s owners, Lone Star Brewery Development, and GrayStreet Acquisitions, a subsidiary of the development company GrayStreet Partners, will close on Friday.
“We’re looking forward to acquiring it tomorrow and writing a new chapter for the Lone Star Brewery,” said Kevin Covey, GrayStreet’s managing partner.
The approval of the sale marks the latest chapter in a series of efforts to redevelop the property where the Lone Star Brewery once stood. At one point, the brewery was to be transformed into a complex resembling the Pearl, with office and retail space, restaurants, a movie theater, a boutique hotel, and multifamily housing. The first phase of redevelopment was supposed to have started in late 2018.
Lone Star Brewery Development Corporation, which owed a combined $28 million to two creditors for the decrepit industrial property, filed for Chapter 11 bankruptcy on Jan. 6. The bankruptcy filing allowed the investment group owned by Parkview Capital Credit, which had acquired Lone Star in 2017, to avert the brewery’s sale the day before the industrial complex was destined for a foreclosure auction.
Lone Star Development’s debt on the 32-acre property mounted after a partnership with Aqualand Development and CBL & Associates Properties fell through.
At the time Lone Star Development filed for bankruptcy, attorney Thomas Rice, who represents the company, said he did not know if the Houston-based owners intended to keep the property or put it up for sale.
The bankruptcy gave the owners a chance to look at options to refinance the debt, said Rice, an attorney at Pulman, Cappuccio & Pullen.
By February, Lone Star Development began to market the property to buyers. Several offers came in before the bid deadline of April 6, ranging between $6 million and $20 million, according to filings.
The owners originally accepted a bid from GrayStreet for $17.25 million.
But on Wednesday, Rice said that GrayStreet would not be able to close on the deal for that amount by the court-mandated May 1 deadline.
He added that if a secondary bidder, Dallas-based Quadrant Investment Properties, which had offered $15 million, also could not meet that target, then the property would have been sold to BI28, a creditor to which Lone Star Development owes $12 million.
Later on Wednesday, the attorney filed a motion stating that after further negotiations, Lone Star Development is “satisfied with the terms of the highest offer” of $14,450,000 from GrayStreet and wanted to proceed with the sale.
At Thursday’s court hearing, U.S. Bankruptcy Judge Craig Gargotta responded to an objection by Quadrant’s representatives over the sale to GrayStreet by asking whether the parties in the case wanted to see the property go to auction. Rice told the judge Quadrant was offering to purchase the property for $15 million, and could meet the closing deadline. But Quadrant did not want to participate in an auction. In the end, the judge approved the sale to GrayStreet for less than its original offer.
“The client was in a position where we have to get something out of it, and something’s better than nothing,” Rice said.
GrayStreet Partners is currently redeveloping the Light Building on Broadway into office space and has plans for a retail-office-residential development near the Pearl.
As for the group’s plans for the property, Covey said, “It’s been so much work in the last few weeks to just get everything aligned, to just do the acquisition, we have not even begun the planning process, to be honest.”
For now, GrayStreet envisions a transformational mixed-use project, he said. “We’re all excited that something will finally happen.”