Bromont Investments Inc., a 1970s-era developer in the Houston market, has taken control of the 244,265-sf Irving Market Center at 3907 W. Airport Freeway in Irving and 190,356-sf North Hills Village at 7520 Loop 820 and 115,763-sf Northeast Business Park at 8200 Northeast Parkway, both in North Richland Hills. Bromont picked up equity from the Building Union Investment and Local Development Fund of America and Dolgen Ventures, a private investment company from San Diego, to close the deal with Midstar Properties Ltd. of Hurst, TX.

Walter W. Rector, principal and founder of the Scottsdale, AZ-based Bromont, tells GlobeSt.com that the JV assumed a cross-collateralized loan held by the Charlotte, NC-headquartered Wachovia Corp. and serviced by Lennar Corp. of Miami. He says the repositioning play calls for spending $2.5 million on rehabbing the retail properties and kicking in extra capital for tenant improvements and signing incentives. The JV also plans to build a 20,000-sf structure for an existing tenant in the five-building Northeast Business Park, which came with enough extra land to add two buildings. The shopping centers are 90% leased and the park is 92.5% filled. A pending deal will bump the industrial park to 94% occupancy.

Rector says the portfolio was "kicking around on the market" when the listing broker brought it to him. "We tied it up a good 12 months due to financial approvals," he says. Bromont's JV agreement calls for it to manage the properties; a CB Richard Ellis Inc. team in Dallas will lease them. Jerry Levan, president of the newly formed Bromont Texas Property Management LP, will oversee the portfolio.

Rector says Bromont, which now owns 29 shopping centers mostly in the East, expects to hold the portfolio about five years before bringing it back to the market. Both shopping centers are Best Buy-anchored along with a roster of predominately national names. The industrial park's lead tenants are Bates Container Inc. and Specialty Electrical Products LLC.

The Midstar portfolio is Bromont's only asset in Texas. But, Rector says, there are other portfolios under negotiation that have Texas pieces. Just last summer, Bromont and Dolgen spent $103 million to buy 25 shopping centers, totaling 2.35 million sf, from Glimcher Realty Trust of Columbus, OH.

Key to getting the Build Fund's backing is the caveat that all tenant improvements, renovation and new construction will be handled by union laborers. The fund most often invests in new developments, but Bromot's turnaround expertise shored up the deal for the class B-plus package, says Michael Stratos, senior vice president for the Troy, MI-based Labor-Management Fund Advisors LLC, manager of the Build Fund. "We saw the opportunity to invest with a fellow investor and developer that we've had a long relationship with," he explains. "And one who knows how to turn the assets around."

The fund, representing 50 union pension funds, will often kick in 100% of the equity. The capital goal is to reap returns in the mid-teens on equity and mezzanine placements for the open-ended commingled real estate fund, which has financed more than $600 million of construction activity in the past five years.