GlobeSt.com EXCLUSIVE: Granite Mines Centex Sell-Off

Gregory P. Fuller, Granite's managing director in Dallas, tells GlobeSt.com that the two-building project at 1101 Post & Paddock Lane and 2617 Great Southwest Parkway in Grand Prairie was snapped up in an off-market deal pulled together by Mike Lish with Kennedy-Wilson International Inc.'s Dallas office. Fuller says the broker, knowing the Dallas-based Granite was searching for its first industrial acquisition in its homeport, wasted no time once he heard about the Centex sale. The all-cash deal closed 45 days after the contract was placed at "below replacement cost," Fuller says, noting that the feat is "very challenging to do in this market."

Word of the sale surfaced just two days before a special meeting of Centex shareholders, who will vote on a plan to roll the development company into the parent corporation in a two-for-one stock split with a $1.2-million price tag. Todd Newman, senior vice president and CFO for Centex Development Co., says Wednesday's vote is poised to pass.

The groundwork was laid early last year for the disposition and consolidation. And so far, the real estate portfolio has brought high interest "and very good prices," Newman says, noting all gain is being funneled into the homebuilding till.

A contract recently fell out for the 220,000-sf, 11-story Citymark Building at 3100 McKinnon St. in Dallas, but other sales appear on track. In April, Centex plans to sell the 160,000-sf office build-to-suit for Centex Home Equity Co. in the Vista Ridge Business Park in Lewisville, TX, plus close on the 381-unit Verandahs at Brighton Bay in St. Petersburg, FL, which like Centex's other multifamily product was pre-sold on condition of lease-up before it came out of the ground.

Earlier this month, Centex sold its last asset in Charlotte, NC, the 123,000-sf Westlake VI industrial building in the Westlake Business Park. At the tail end of 2003, Centex disposed of its lone Michigan development, the State Street Business Park in Ann Arbor.

And in California, Centex is waiting on a contract for the 62,000-sf Camarillo IV industrial project in the 18-acre Camarillo Business Park. Newman says there are several interested parties for Centex's last commercial holding in the state.

"We don't anticipate additional multifamily or commercial activity once we sell everything out," Newman confides to GlobeSt.com. The locally based Centex got into commercial development in the late 1990s, but it just couldn't get the same kind of foothold that it enjoyed in the residential arena plus the cycling time was longer than the developer liked.

The 12-acre Hilltop Business Center in the Upper Great Southwest Industrial District presents "a leasing risk" that didn't faze Granite, which has 200,000 sf under construction in Flower Mound. With Hilltop Business Center sitting half leased, Granite hired Rick Medinis and Mike Stanzel with the Robert Lynn Co. in Irving to market the two-building project for $3.25 per sf to $4.50 per sf triple net.

Fuller says there are proposals out for 40,000 sf to 80,000 sf of deals for the property, positioned a half block from Interstate 360 and just south of the Dallas/Fort Worth International Airport. "We're confident we'll be able to meet our objective with the property...to lease it up as fast as possible," he says of two-year-old shell space tagged with a rate to compete with the area's older product.

According to real estate sources, Centex took over Hilltop in January 2002 from the Huntsville, AL-based Triad Properties Inc. Last fall, Nextel signed a long-term lease to occupy 80,500 sf and in recent months, Midea, the North and South American sales arm for GD Midea Holding Co. of China, made a long-term commitment for 28,350 sf. Move-in is April 1.