(Corrects names of Wexford partners in eighth paragraph of story published April 4.)
April 4 (Bloomberg) -- Wexford Capital LP, a hedge fund with $5 billion in assets, is planning to build a $350 million office-and-condominium tower in Midland, Texas, as demand rises in a region home to the world’s second-largest oil field.
The proposed 53-story Energy Tower at City Center has begun pre-leasing its 560,177 square feet (52,042 square meter) of office space, said William Meyer, a partner at Energy Related Properties, which is working with Wexford on the project. The tower would be more than twice the height of the city’s tallest building.
Midland is located in the Spraberry-Wolfcamp range, which has 50 billion barrels of recoverable oil, second in the world to a Saudi Arabian field, oil-exploration firm Pioneer Natural Resources Co. said in an investor presentation yesterday. No new high-rises have been built in the west Texas city of 120,000 since the mid-1980s, before collapsing oil prices sent the city’s economic fortunes plunging, according to Mayor Wes Perry.
“It’s perfectly logical that this gets built,” Joseph Jacobs, co-founder of Greenwich, Connecticut-based Wexford, said in an interview in Midland. “A new building like this in New York would receive little notice, but we think New York needs this type of building a lot less than Midland.”
Wexford should be able to find tenants for the building’s office space because of a supply shortage and rising demand from large oil companies returning to the Permian Basin after reducing operations in the 1980s and ’90s, Perry said. The west Texas basin has yielded more than 30 billion barrels over the past century, more than any other U.S. region, according to Midland College’s Petroleum Professional Development Center.
“We’ve never had someone willing to pull out the checkbook and do something like this,” Perry said.
While Wexford hasn’t completed financing for the tower and office rents aren’t yet set, “money isn’t an issue,” Jacobs said. Plans for the tower include about 100 condominiums, a 198-room hotel, 53,500 square feet of retail space and a movie theater. The tower’s architect is Michael Edmonds, principal of Edmonds International Ltd. in New York. Energy Related Properties, Wexford’s partner on the project, is a Midland-based investment firm led by developers Meyer and Scooter Brown.
Wexford partners including Jacobs and Charles Davidson hold more than 25 percent of the capital in Wexford, which focuses on energy and real estate investments, Jacobs said. The fund owns a 44 percent stake in Diamondback Energy Inc., a Midland-based exploration company.
While Wexford has owned real estate since its 1994 founding, the Midland building would be the largest development it’s built, Jacobs said.
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