DALLAS-Brookwood Financial Partners has acquired Heritage Square I & II, a two-building, multi-tenant office property.
The 56%-occupied property contains 359,758 square feet and is located at the interchange of the Dallas North Tollway and Interstate Highway 635 (the LBJ Freeway), which is undergoing one of the most comprehensive transportation improvement projects in the United States.
This is the ninth property and the fourth in Texas that Massachusett's-based Brookwood has either acquired or put under contract in the last six months as it continues to execute successfully its value-add strategy of buying sound properties from distressed sellers for deep discounts in improving markets. Earlier this month it purchased a 10-story office building in Irving.
Brookwood has extensive plans to improve to the property. “We will be investing over $6 million in targeted capital improvements in Heritage Square, including upgrading the landscaping and renovating the entrances, lobbies, common areas, bathrooms, café and conference and fitness centers,” says Thomas Brown, Brookwood's director of acquisitions.
“Consistent with our ongoing value-add strategy, we are acquiring this property at a deep discount to replacement cost and because of our low cost basis, can afford to make these significant upgrades while executing leases at competitive market rates and offering attractive tenant improvement packages," he adds. "As a well-capitalized owner focused on repositioning the property and leasing space, we will have a competitive advantage over the higher-basis buildings in this submarket."
Heritage Square is a well-located property surrounded by numerous amenities. The Upper and Lower Tollway submarkets, which comprise the Far North Dallas market, have been two of the strongest performing submarkets in Dallas over the last 24 months. According to CB Richard Ellis, since peaking at 19.5% in 2009, the Far North submarket vacancy has declined over 23% to its current level of 14.9%. In the past five years alone, the market has experienced nearly 2.5 million square feet of positive net absorption.
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Los Angeles-based Mesa West Capital provided the financing to fund the acquisition and capital improvements.
“Heritage Square is well positioned to capitalize on the improving Galleria submarket which will continue to tighten as the LBJ Freeway construction project nears completion,” added Mesa West's Jason Bressler who originated the financing. “Brookwood has a strong track record of executing value-add business plans and will use proceeds from Mesa West Capital's loan to complete a major renovation and lease up the current vacancy at the property.”
Cushman & Wakefield represented the seller in the transaction. Charles Foschini, Christian Lee and Chris Apone in the Miami office of CBRE arranged the financing.
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David Phillips
David Phillips is a Chicago-based freelance writer and consultant with more than 20 years experience in business and community news. He also has extensive reporting experience in the food manufacturing industry for national trade publications.
