Development Talks Begin for $10M Uptown Buy

The Dallas-based duo of Behringer Harvard and PRG Realty picked up the deal when another fell out for 1909 Woodall Rogers, a 74,000-sf, class A office building and abutting Bank One drive-through facility and 1.6 acres of prized developable land. Real estate sources tell GlobeSt.com that seller Olympus Real Estate Partners got in excess of $10.2 million despite the trio's infill positioning in a high-brow location.

"For us, it's an opportunity play," says Robert Aisner, partner in Behringer Harvard. With office development less than likely, talks have started with developers as hotel and multifamily grab the spotlight. A decision could be forthcoming in three months, Aisner tells GlobeSt.com. As for the play itself, he says the mid-term fund's plan is simple: buy, reposition and sell in three to five years.

Mark Robertson, PRG principal, says the two struck a 50-50% partnership to pick up the asset. "It was the right size, has excess land and it's not right for a lot of people because it's a ground lease," says partner, Drew Peterson. "But, it's right for us. It's a perfect match between us and Behringer." The properties are leased for 99 years from Mrs. Orien Woolf of Dallas.

Trammell Crow Co. has secured leasing and management for the five-story office building, 76% occupied at sale time. But, there's work to do since Republic Title, with 25 months to go on its lease, exited 15,000 sf earlier this month. There's also "a significant roll" coming in a couple years, says Jason Mattox, Behringer's senior vice president who negotiated the acquisition. The top space taker is the headquarters for Precept Builders. The office space is quoted at $19 per sf for a five-year term with 50-cent bumps.

The assembly of mixed uses has "plenty of upside potential," says Mattox. "Among the options being considered is a continuity among all the tracts." But, the immediate plan is to address some deferred maintenance for the office building and garage.

Olympus acquired the properties in 1998 in a portfolio takeover. With $3.5 billion in three funds under management, Olympus has just one other asset in Uptown and that hold too is coming to a close as buyers are sought for the remaining condos at the 1999 McKinney Lofts, developed with locally based CLB Partners, says Greg Adair, a partner in Olympus. The 1909 Woodall Rogers sale, he says, was normal turnover of assets that resulted "in a transaction that most parties were pleased with.