Two real estate heavyweights behind projects such as CITYCENTRE and Green-way Plaza are joining forces to launch a new company that could deepen their investments in mixed-use developments in Houston and expand their reach across the Sun Belt.
Houston-based Midway Holdings and Orlando, Fla.-based Parkway Property Investments, both private companies, are merging their services platforms and teams totaling about 300 into one firm that will be headquartered in Houston. They’ll have co-CEOs (Jayson Lipsey and Jamie Bryant) and co-chief executive chairmen (Brad Freels and James Heistand). The new company will own, operate or have under development 45 million square feet in Texas, Florida, Georgia, Virginia, Arizona, Colorado and California.
It’s not a traditional merger because neither company is acquiring the other.
Both will continue to live on in some form and no real estate is trading hands now. Instead the two commercial real estate firms are forming a new company, called Parkway Ventures LLC, that will operate under the brand Parkway. The new Parkway will undertake future operations and development work for both firms.
It will focus on mixed-use and transformational real estate projects across the Sun Belt.
Transformational may seem like PR jargon, but consider the impact Midway had on west Houston with its 2009 conversion of the former Town and Country Mall into the outdoor mixed-use development CityCentre, and its ongoing redevelopment of an industrial site into the 150-acre mixed-use project, East River in the East End. Both are once-in-a-generation developments reshaping the surrounding neighborhoods.
The new Parkway could export Midway’s approach to other markets and tap a deeper pool of financing to tackle more projects across the Southern U.S. or larger projects in Houston, its principals say.
“There’s no doubt in my mind that the community is better off because of CITYCENTRE than what was there before,” said Jayson Lipsey, CEO of the legacy Parkway. “We believe that the future of development is dynamic, mixed-use type environments where people want to go and be.”
Parkway operates Houston properties such as Greenway Plaza, the mixed-used complex in the neighborhood that bears its name, the CityWest Place office complex along the west Beltway and the mixed-use Post Oak Central in Uptown.
The combined company gives Midway a leg up in expanding across the South because of Parkway’s existing footprint there and enables Parkway to upgrade and reposition some of its existing office properties with mixed-use, multifamily and retail elements.
“We are good at buying existing assets and repositioning assets,” said James Heistand, co-chairman of Parkway. “Midway has ... the mixed use ground-up development (experience) which we did not have.”
While Parkway has grown over the years through acquisitions, Midway has focused on building ground-up development, said Brad Freels, current chairman of Midway who will serve as co-chairman of the new company. But higher interest rates and construction costs have stymied much development across the real estate industry in recent months, Freels added.
“It’s very expensive to develop (in today’s environment). But there’ll be opportunities to acquire a lot of great properties we believe,” Freels said. “We have scale that can take advantage of the opportunities that the market is going to present to us for the next three to five years.”
The new company also isn’t stepping away from Midway’s existing development work, including the $2.5 billion East River project and the proposed redevelopment of the 70-acre former ConocoPhillips campus in west Houston’s Energy Corridor into the Watermark District at Woodcreek mixed-use project.
“(The ConocoPhillips campus) is the perfect example of an acquisition that we would make and the perfect opportunity for a new company in the future: You find something that is undervalued by somebody, you buy it and you rethink it,” Freels said.
Inside the firm
The co-CEOs and chairmen chose to brand their new entity as Parkway because they believe it has a more recognizable reputation nationally, which they argue could help it acquire funding in the future, they said.
The new Parkway will handle all buying and selling of real estate, oversight of property and asset management, accounting, marketing and communications, leasing, and investments.
Midway Holdings will operate as a separate development entity, owned by Brad Freels, responsible for spearheading future development work for the new Parkway firm. The legacy Parkway Property Investments will also retain its existing ownership comprising a small group of investors with James Heistand as the majority owner.
Over the years Parkway Property Investments and Midway Holdings have bought several assets through joint ownership partnerships or agreements with other companies. Those properties will retain their existing ownership structures. marissa.luck@houstonchronicle.com
Marissa Luck
