Ali Choudhri Wants To Reinvent His Houston Office Buildings. He Has To Hold Onto Them First

Ali Choudhri doesn’t flinch as the man standing behind his desk chair jabs needles into his scalp, ears and neck. Doing acupuncture in his office at 2425 West Loop S. in Houston is a common practice for him.

Minutes before, Choudhri was moving swiftly through the 11 floors of the 283K SF building, visiting with tenants and describing what renowned architect I.M. Pei had in mind when he designed it in the early 1980s. Choudhri texted the acupuncturist to meet him on the way back up to his office; the practice opens the third eye, he says. 

While he confidently fields calls and explains his future plans for the building and what he’s done to transform it already, you wouldn’t know that days earlier, the LLC that owns 2425 filed for Chapter 11 bankruptcy. Or that the National Bank of Kuwait has filed notices twice this year to bring the building to a foreclosure auction.

But a foreclosure auction hasn’t happened, and Choudhri is focused on revitalizing the building, not losing it. Unlike owners of some other Houston office properties, Choudhri doesn’t plan to hand in the keys.

“We’ve carried the building since Covid and have significantly leased up the building,” he told Bisnow in an interview this week. “We care about our tenants. It’s a big obligation and we take it very seriously.”

Choudhri serves as CEO of Jetall Capital, which operates more than 2M SF of office buildings across Texas. Choudhri learned his love of real estate from his father, who founded Jetall in London in 1961. 

Knowing Choudhri is kind of like watching a NASCAR race, said 2425 West Loop's in-house acupuncturist, Donald Lefeber, but "he has a good heart."

He has been in Houston since he was 3 years old, and started attending Resolution Trust Corp. auctions before graduating from high school. Choudhri began developing townhomes when he was still a teenager, he said. His early real estate investments included distressed properties, shopping centers and multifamily.

Today, Jetall claims to be the largest private owner of commercial office space in Houston's Galleria submarket with more than 1M SF.

That portfolio includes 1001 West Loop S., a 255K SF building just down the street from 2425 that has also faced the threat of foreclosure. Romspen, a Canadian commercial lender, filed paperwork last month to set up a foreclosure auction July 5. The filing indicated that the $18.5M loan issued in 2019 had matured and remained outstanding and delinquent. 

Choudhri’s firm filed for an emergency temporary restraining order against the lender on June 5 to block the foreclosure, The Real Deal reported, which was granted because the ownership entity, Galleria Loop Note Holder LLC, said it wasn't properly informed of the foreclosure sale. The LLC claimed it missed payments because Romspen failed to fund previously agreed-upon improvements.

The loan has since been extended, Choudhri said. Romspen didn't respond to a request for comment. 

Regarding 2425 West Loop S., Choudhri said negotiations are ongoing with the lender. National Bank of Kuwait didn’t respond to requests for comment.

Choudhri became involved in ownership of the building in 2013 and worked to renovate it for the first time since it was built in the 1980s, he previously told the Houston Business Journal. Stage Stores, the owner of defunct off-price department stores including Palais Royal and Bealls, signed a lease for nearly 200K SF of office space in the building in 2015. 

Ownership of the building switched, though it remained tied to Choudhri, in May 2018. That is when the National Bank of Kuwait provided a $60.2M loan, according to a filing in the bankruptcy case. 

Two years later, things looked good for the building. Stage occupied the vast majority, while Choudhri had worked out a deal with Sonder to convert two floors, and possibly a third, into residential. Sonder provides fully furnished units for short-term rentals or extended stays.

But following the onset of the pandemic, Stage declared bankruptcy and sold its assets, eventually moving out of the building, despite Choudhri’s attempt to buy the company. 

Sonder pulled its lease agreement, and both parties have sued each other. Sonder sued in February 2021, claiming Choudhri and his partners committed fraud, breach of contract and civil conspiracy by claiming to own more real estate than they actually did. The landlords were granted a partial appeal, compelling the parties to arbitrate, according to a December 2022 court opinion. 

In May, Choudhri sued Sonder’s Canadian parent company, claiming the short-term rental provider had guaranteed the 184-month lease and is still responsible for it. That lawsuit is still active.

Amid the legal wrangling, the result was an almost empty building a year following the onset of the pandemic, Choudhri said. 

While he didn't say exactly how occupied the building is now, he’s secured new tenants, including DC Partners, which signed a full-floor lease in November. IWG, a provider of hybrid working solutions, has signed a lease for two floors in 2425, and Choudhri said he is negotiating a lease with a stem cell and exosomes company.

Ed Castillo, a regional director for IWG, said the building appealed to the UK-based flexible office provider because it is “super unique,” has a great location and 70% of the offices have a window view. Window offices are the primary revenue generator in their business, he said. 

Amenities in 2425 include a gym with locker rooms and showers, in-house acupuncture, on-site security and a view of the building’s front door from every floor. Choudhri is offering flexible lease terms to cater to tenants’ needs, he said. Future plans include installing a cryotherapy machine and a float tank, as well as leasing to restaurants on the first floor. 

IWG is also leasing a full floor in 1001 West Loop S., Castillo said, with plans to lease more than 100K SF throughout Choudhri’s buildings.

While leasing volume has increased, Galleria 2425 Owner LLC disclosed in its bankruptcy filing that it had between $10M and $50M in assets and $50M to $100M in liabilities as of July 5. The bankruptcy is meant as a reorganization, Choudhri said, not a liquidation.

The LLC lists the National Bank of Kuwait as its biggest creditor, with a $17.5M partially secured claim and a $1.8M unsecured claim. It also owes nearly $140K combined to three law firms and more than $170K to a variety of contractors.

Galleria 2425 Owner LLC has asked the Southern District of Texas bankruptcy court for permission to use the cash it has received from the National Bank of Kuwait to continue operating the property, claiming it “will suffer irreparable and immediate harm if it is not granted the relief requested.” 

The building is turning a profit, according to a bankruptcy filing. Rent income is about $123K, leaving about $37K after operating expenses, the budget projection shows. 

In the filing arguing to use cash collateral, which is signed by Choudhri, he said he plans to continue to operate the business, manage and maintain the property, and continue efforts to lease vacant space, which would preserve and improve the value of 2425 West Loop S.

At the building last week, before sitting down for an acupuncture session with Lefeber, Choudhri boasted about 2425's architecture — it’s one of just two Houston buildings designed by Pei, most famous for the glass pyramid outside the Louvre in Paris — and its future potential. He projected supreme confidence about the future of his sprawling portfolio, even as he fights in court to keep two of its crown jewels. 

“I don’t think the economy of the world is prepared for this office transition,” Choudhri told Bisnow. “And we want to be on the forefront of it.”