Promenade North

DALLAS-Hartman Income REIT has bed down a long-awaited closing for a 137,622-sf shopping center and 12,284-sf office building in North Dallas. The value-add play opens with 71% occupancy, a reading that trekked north nine percentage points since going under contract last year.

David Wheeler, executive vice president of acquisitions for the Houston-based REIT, tells that the Promenade North shopping center at 740-980 N. Coit Rd. and professional building at 500 N. Coit Rd. were projected to sell for $15 million to $20 million. He says the REIT claimed the class B asset for less than $15 million and considerably less than replacement cost, which he estimates at $30 million for the 1970s-era buildings on 13.2 acres. He says the Unum Group of Chattanooga, TN passed the deed in the past 48 hours.

Wheeler says the team’s already interviewing architects as the first step in determining the extent of the overhaul for the asset. He says the REIT is banking on increased rents from the renovation and lease-up to build upside. On the road to the closing, the shopping center’s anchor, International Gourmet Foods, signed a renewal and expansion, bumping its lease to 25,000 sf. The expansion is under way.

During the transition, Wheeler says the REIT has kept Colliers International’s executive vice president Kevin Brookmole in place for leasing while management rolls in-house. Wheeler says there is an additional 10,684 sf of retail and office leases rolling before the year ends and another 16,577 sf in 2009.

Hartman Income REIT owns six office properties, totaling 650,000 sf in Dallas, of which three-fourths is located within five miles of Promenade North. With the closing, the new owner has claimed its first piece of retail in North Texas. The majority of its retail is located in Houston and San Antonio.

Wheeler says the REIT hung in for the long haul due to the value-add lining of the acquisition, with the contract in place before former Colliers’ broker Cary Krier moved to Jones Lang LaSalle in Dallas. “It worked out to our advantage for us to have a long contract and close it at our convenience,” he says. “We felt it was a really good buy.”