DALLAS-Caddo Holdings LLC has made its first acquisition sinceits formation last summer, buying Wells Fargo Tower in the Lakewoodarea of the city for an undisclosed amount. Dallas CentralAppraisal District has assessed the 173,855-square-foot building at$3.9 million.

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The company, which is capitalized by a Texas-based privateequity fund, purchased the class B building from Newkirk Alake LP,a subsidiary of New York-based Lexington Realty Trust., which hadowned the building since 2007. The asset traded in an off-markettransaction, according to Dustin Schilling, a principal at CaddoHoldings. He co-founded the firm with Stacey Davis and TimSlaughter in August 2009.

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Located at 6301 Gaston Ave., Wells Fargo Tower was constructedbetween 1971 and 1981 by Allied Lakewood Bank. It serves as townsquare for the Lakewood neighborhood and by walkable retail.

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“This is a location play given the land constraints,” Shillingtells GlobeSt. “It’s unlikely there will ever be another officebuilding built in this area.”

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Wells Fargo Tower is 63% occupied, and the building’s threelargest tenants are Texas Neurology, Wells Fargo and the Advocate.The quoted rate for the building is $17 to $21 per square foot pluselectric.

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The building will be leased and managed by Caddo, which plans toattract tenants living in East Dallas, but currently maintainingoffices elsewhere. “We have identified a large tenant base, whoseprofile fits our vision for the building,” Schilling says. “For theEast Dallas resident, maintaining offices at the Wells Fargo Towerin Lakewood is a great way to conserve time and help theenvironment by shortening commutes.” He will oversee the leasing ofthe building.

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Caddo will office onsite and is planning interior cosmeticimprovements that will make the building more attractive to EastDallas residents and businesses. Shilling says the new owner willspend more than $2 million to upgrade the building, and Slaughterwill oversee the renovations.

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The firm received a fixed-rate bank loan to acquire theproperty. Justin Engler of Cohen Financial arranged the financing,which had LTV below 50%, Shilling says, adding that Caddo Holdingsis focused on buying well-located assets with more conservativeleverage than was seen in the last real estate cycle.

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Shilling notes that the company is pursuing other acquisitions.It is focused on office assets in major Texas markets that offervalue-added investment opportunities.

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