Class A Torch Passes With $17M Unsolicited Offer, Built-In Conditions

DALLAS-After three off-market offers and a Dallas visit by its top exec, AmeriVest Properties Inc. has closed on a 109,062-sf, class A prize in Uptown. Equally as important as the near $16.3-million check was guaranteeing that the fully leased Hampton Court would stay under the watch of Corrigan Real Estate Services, now part of Colliers International.

"If they wanted to own my building, they couldn't do it any other way," Newt Walker, president of the Newt Walker Co. in Dallas, tells GlobeSt.com about the sale of Hampton Court at 4311 Oak Lawn Ave. "There are a lot of my friends in that building. That's why I had to make sure with the sale that there was no disruption." In other words, Colliers, which offices in the building, stays in control of its longtime property management pact and Walker holds onto leasing reins for the interim--a deviation from the norm for the Denver-based AmeriVest.

Walker says AmeriVest's John Greenman came to Dallas to place the final offer. "If not for that, we probably would not have done business," Walker confides about the unsolicited courtship that began about eight months ago. "AmeriVest made me an offer I couldn't refuse."

According to AmeriVest, the deal closed with nearly $8.4 million in cash and the assumption of a $7.9-million, non-recourse loan at a fixed-rate interest of 4.48%. The interest-only loan matures in November 2007. AmeriVest projects a cap rate of 8% in the first operating year.

The seven-story building, assessed at $9.5 million by Dallas County, is positioned on one acre at the intersection of Oak Lawn and Herschel avenues, right on the edge of Highland Park. Built in 1987, the complex is a mix of office and retail space with an abutting parking garage.

The office-and-retail building has 25 tenants, of which slightly less than 11% of the space is up for renewal in 2005. The sweet spot for AmeriVest is the roster is a ready-to-go match for its well-known strategy to carve buildings into smaller offices to reduce risk exposure. Hampton Court's average lease is 4,363 sf.

Walker invested six years into repositioning Hampton Court, focusing on rebuilding the tenant roster with the right mix to go along with upgrades of the structure and its garage. He says Lincoln Property Co. developed "a $200 per sf building" in terms of finish-out, location and parking, but a previous owner let the asset's stature slip below its peers in the prestigious submarket.

To accomplish his goal, Walker says he refused to renew leases for some tenants, taking the asset from 85% occupancy down to 50% to rebuild the roster. "We cleared the building from stem to stern," he says. "It truly became a labor of love. Others tried to lease it, but they weren't getting the job done. So I took it over. We wanted tenants who felt like this was the only alternative to Preston Center."

And now, Walker stresses, he's not going to abandon the ship with the sale. "Although a deed transferred, they aren't going to notice any difference," he says.