DALLAS-In early 2007, Younan Properties acquired the 1.4-million-square-foot Thanksgiving Tower in downtown Dallas in a value-add play. The office building, at the time, was 58% leased, with less than 8% of the in-place leases up for renewal that year.
Between the time when the Los Angeles, CA-based Younan acquired the building – with help from a $106 million loan underwritten by Countrywide Commercial Real Estate Finance – and when Woods Capital bought it from foreclosure just last week, the occupancy hasn’t changed much. CBRE’s John Alvarado says the asset at 1601 Elm St. was 55% occupied at closing.
Still, despite the financial and occupancy issues plaguing the building, it attracted a great deal of interest when brought to market by Alvarado and CBRE colleagues Gary Carr, Eric Mackey and Robert Hill. In an interview with GlobeSt.com, Alvarado says the team broadly marketed in attempts to get the word out to everyone and anyone.
“You never know where there might be new interest, new buckets of money or someone who hadn’t initially had Dallas on the radar screen,” Alvarado explains. “An asset like that might compel them to put Dallas in their sights.”
Which is exactly what happened – the 1980s asset generated 20 bonafide offers.
“We were pleased by the level of interest, especially from new groups,” he says. “We saw new sources of capital, renewed sources of capital, along with people who had been in Dallas decades ago, but hadn’t returned until just now.” Thanksgiving Tower also attracted international buyers, especially from Canada.
And The Winning Bidder Was . . .
The asset ultimately went to Jonas Woods for an undisclosed amount. The Dallas Central Appraisal District assesses Thanksgiving Tower at $65.5 million.
“Their pre-bid due diligence was compelling,” Alvarado explains. “They spent a lot of time understanding the asset ahead of time, and during the buyer interview process, and in the best and final, they expressed a clear understanding of what the asset needed.” Also respected, Alvarado went on to say, was the timing from bid to closing. “They accommodated and addressed the seller’s need with respect to price and terms, plus the speed of due diligence and speed to close. They did a phenomenal job,” he adds.
The seller in question, Berkadia Commercial Mortgage, had acquired Thanksgiving Tower in February 2013 through an auction, then foreclosed on the asset.
The Future . . .
The question becomes, of course, how Woods plans to fill the building. Demand for space in downtown Dallas hasn’t been as strong as that demonstrated in the Uptown submarket next door. The struggle to lease up Thanksgiving Tower is nothing new; about midway through its ownership tenure, Younan Properties swapped leasing teams, taking the contract from Stream Realty Partners and giving it to GVA Cawley.
But Alvarado points to the building’s long-term tenants, such as Gardere Wynne Sewell LLP and the Tower Club, both of which have remained for many years. “A lot of the tenants were curious about who the new owner was going to be and what was in mind for the asset,” he observes. “With the plans Jonas has for the building, he’s going to improve his ability to retain those tenants, and get new ones in place.”
The gist of those plans is still under wraps, but sources suggest that common areas are being targeted, as is street-level space.
Alvarado shares a story of what happened after the building’s sale closed. When he returned to Thanksgiving Tower to thank the staff for their help during the marketing and escrow process, Woods was already on site. “He was there with what appeared to be contracts; he was pointing and dreaming,” Alvarado says. “He was on it from hour one.”