Uptown's Upside Fuels Fund's $12.7M Cash Buy

Yesterday's closing most likely was the last of the deals for Dallas until a third fund opens in 2003, Michael E. Burrichter, principal of CB Richard Ellis Strategic Partners LP, tells GlobeSt.com. "Never say never," he says about the possibility of the buyer's return, but the indication is it won't be before a new fund is in place.

The Los Angeles-based fund acquired the 58%-occupied McKinney Place from Trizec Properties Inc. of New York City in a match put together by Gary Carr of CB Richard Ellis Inc. in Dallas. McKinney Place, a boutique property, was never on the market. Carr took the deal to the fund, Burrichter confides.

The occupancy and the seller profile match last month's $30-million purchase of the 374,165-sf Reverchon Plaza, a 50%-occupied office building sold by Crescent Real Estate Equities Co. of Fort Worth. Yesterday's deal profile also closely matches a 2001 acquisition from Houston-based Hines Interests of the 359,000-sf Preston Park South, now called Preston Park Financial Center, bought by CB Richard Ellis Strategic Partners I LLC.

The Dallas acquisitions exemplify the value-add funds' penchant for buying non-core assets from big-name players. The key is the upside potential, not only of Dallas but the Uptown submarket. "We think both of these buildings are poised to capture some of the upside that's coming to Dallas," Burrichter says. "This is the right place and the right product type."

McKinney Place, built in 1984, has the engineering firm of Hewitt-Zollars as its lead tenant. "It's a boutique building in a great location," Burrichter says.

Mining the upside means focusing hard on finding tenants for the Uptown buildings, which were leased by in-house teams of their previous owners. Burrichter says the fund hasn't picked its leasing teams as yet. But, it has started the re-branding of the Reverchon, now being called 3500 Maple.