$18M Plan Gels for 220,000-SF Foreclosure

Zaya Younan, president, tells GlobeSt.com that North Houston Bank provided a three-year loan with a 65% LTV for acquisition and enough rehab capital to take the class B-minus building to a class A status. Lincoln Property Co. in Dallas will oversee the renovation plus lease and manage the 19-year-old, 10-story office building at 2711 LBJ Freeway.

The first leases roll in 2005, but Younan says "we feel we have enough time to reposition the building...and when that time comes, they will stay for the long term." The major tenants are Morgan Stanley, KB Homes and Detroit Diesel Corp.

Younan says the Baltimore-based Aegon, the US arm of the Netherlands-headquartered Aegon Group, accepted just enough money to satisfy the Kolter note. The Meridian Center was under contract for three months while the receivership ran its course. He says several buyers were in the running, but the California investor's reputation with the lender and proven track record in Dallas won the deal.

The Meridian Center transaction pushed Younan Properties over the one million sf mark, all bought in the past year to build "a critical mass in a fast-changing Dallas market," he explains. At the end of February, he is set to buy another foreclosed office property: the 260,000-sf 1111 Mockingbird, now held by GMAC of Horsham, PA. "We're getting some good deals because we're aggressively looking and the banks know we're serious buyers," he says.

Younan is convinced the Dallas market will make "a significant turnaround" this quarter or next, given the recent job growth and expansions now taking place. He says his plan is to be ready with "prime assets in this under-discovered market." The Meridian Center construction, to be done in two phases, will ramp up as soon as possible, bringing a carve-out of 20,000 sf for a build-out into ready-to-go spec suites.

Younan, as before, was represented by the Grubb & Ellis Co. team of Darrell Betts and Scot Farber, who are looking in their home turfs of Houston and Dallas, respectively, for more office buildings to buy. Younan says the two-year-old company will be working a $1-billion buying plan this year to acquire five million sf mostly in Dallas and Houston.