Stacey Davis, vice president for the Los Angeles-based buyer, credits CB Richard Ellis' executive managing director Gary Carr in Dallas with putting 4245 N. Central Expwy. on M West's desk. "He put two and two together," Davis says, pointing out that M West's eye is only on Uptown-Turtle Creek and Preston Center office buildings.

Behringer Harvard Short-Term Opportunity Fund I LP held the 22-year-old building in a partnership with Behringer Harvard Holdings, taking 62.5% of the ownership interest at acquisition in August 2004 and investing $3.5 million in equity. The partners paid $7.7 million for the building.

In an SEC filing, Behringer Harvard says the sale price represents a loss to the fund, but is predicated on the average of two appraisals, which is $8.9 million. "While the identified third-party purchaser is also offering a price higher than the average of the two appraisals, it is still substantially less than the purchase price Behringer Harvard Holdings is paying to the partnership," it reports, noting that its $12-million payout was 34.8% higher than the average of the two appraised values.

[IMGCAP(2)]M West is starting out with 87% occupancy in the seven-story, class B office building. Davis tells GlobeSt.com that 12% of the leases will roll before 2011, 23% in 2011 and 54% through 2012. "There's upside in the rents," he emphasizes, adding the average lease is 4,000 sf. Nathan Durham of PM Realty Group in Dallas has been brought on board to lease the asset with a quoted rate of $21 per sf plus electric.

In the fund's SEC filing, it reports falling short of leasing expectations for its acquisition strategy. Capital One was seated on the first floor, but two large tenants didn't re-up as Behringer Harvard had expected. Today's roster also includes BGO Architects and the McCarthey Co.

Nonetheless, the asset was attractive to the fund for the same reasons as M West: a prominent location near Downtown Dallas in a performing submarket. Behringer Harvard concluded that increased tenant-improvement costs and unexpected capital expenditures for the partnership have increased its basis in the 86.4%-leased building "to the point where its general partners believe that it is unlikely that the partnership will be able to sell the building for a price that will result in a cash-on-cash gain."

Davis points out that M West is a long-term holder, which is why it's focused on Uptown and Preston Center, the two best performing office submarkets in the city. "We can feed off the sticker shock in Uptown proper," he says. "We feel like the building presents well. It's got a good place in the market along Central Expressway." And, the tenant profile is similar to 3500 Oak Lawn, a 101,000-sf class B office building that M West bought in January 2006 and is now prepping for a renovation.

The building will be re-branded to 4245 Uptown to take advantage of its 0.64-acre irreplaceable location at the corner of Fitzhugh Avenue and North Central Expressway, Karl Slovin, M West's president, says in a press release.

Behringer Harvard's point man was senior vice president Michael Westfall. "Despite all of the current market turmoil, M West Holdings stepped up to the plate and closed the transaction," he says in the release.

Davis says the purchase was underwritten for five years although M West is a long-term holder. The deal crossed the finish line with a three-year floating-rate loan from New York City-based Citigroup.

With the deal now closed, Davis says the search has picked up again for more office deeds in M West's favored submarkets. "We like what's going on there for long-term holders," he says.