Transwestern Pockets 908,588-SF, Class A Trio

Matt Haley, senior vice president of acquisitions for the Chicago-based Transwestern Investment, says the policy is not to discuss price. But, he adds, the 80%-leased, class A building trio along North Central Expressway came at "well below replacement costs and in excess of a 10% initial cap rate." Transwestern also assumed some debt, with a 70% loan-to-value ratio, held by a third-party lender for Two Energy Square, a 356,000-sf tower at 4849 Greenville Ave. Other than that, it was an all-cash swap for the deeds from the Canadian-based Kolter Property Co, he tells GlobeSt.com.

The makeovers of common areas, inside and out, will start immediately and take about a year to complete. Transwestern Investment has brought in Blair Oden and Susan Singer, both with ties to the Dallas office of Houston-based Transwestern Commercial Services, as the "new blood" to replace Kolter's in-house team. "We should be able to maximize the value in three to five years," Haley says of the NOI upside that will be realized with an aggressive leasing and management strategy and "significant" capital outlay for the renovations.

The trio's flagship, the 296,000-sf Triton Building at 6688 N. Central, is vacant, but yesterday's show could shake loose some prospects. The packaged buy also included the 253,000-sf One Energy Square at 4925 Greenville Ave.

A fourth building in the cluster was not bought due to its age, Haley says. But, it's a safe bet that the Dallas-based Holliday Fenoglio Fowler LP team will continue to market the class B, 162,346-sf Meadows Building at 5646 Milton St. as a one-off, just as it's doing with the balance of Kolter's Dallas disposition.

Haley, the buyer's negotiator, says Transwestern Investment staked claim at Energy Square for its North Central Expressway positioning and high-profile image. He attributes the complex's sagging occupancy to being "under-managed and under-leased." Haley says leasing and management are sure to be aggressive, going forward. In today's market, aggressive players are winning tenants with the usual fare of free rent, sometimes stretching to a year, and bargain-basement first steps for long-term commitments while the brokers are collecting perks such as free vacations and leased vehicles for making the close.

For the Holliday Fenoglio Fowler team in Dallas who did the deal, the Energy Square sale marked its second class A trade this month in the same submarket. Although the team's not talking, there are some who say the double deal is an affirmation of the submarket's strength. For previous story, click here.