Creekstone Partners' TIC Antes Up $60M Plus for Landmark Retail

DALLAS-Houston-based Creekstone Partners, backed by a deep pool of tenant-in-common investors, has bucked the institutional crowd for 229,880 sf of Preston Center's premier retail. The $60-million-plus transaction represents the buyer's largest deal since it launched a year ago and first in Dallas/Fort Worth.

Marc Goldstein, principal and co-founder of Creekstone Partners, credits the TIC's win of Preston Center Pavilion and Square with its proposal for a 30-day due diligence and 45-day closing schedule. "It was a very tight closing schedule and we got it done," he tells GlobeSt.com. "We knew we would have to do that to beat the institutions. We had a great team of people that pulled together to show Prudential and Lincoln that not only is TIC big competition for institutional properties, but Creekstone proved to the institutional world that we're here, we're around and we can get the job done."

Goldstein says the hard-fought battle was won by about 35 investors, mostly Californians who put in an average of $750,000 apiece, for a 90%-leased retail corner bounded by Berkshire Lane, Westchester Drive and Luther Lane in one of Dallas' ritziest mixed-use pockets. In contrast, the average TIC player usually drops $350,000 per deal.

Goldstein says the deal closed with a 10-year conduit loan for $42 million from Pittsburgh-based PNC Bank's Kansas City office. The loan carries a fixed-rate interest of about 5%.

Though it wasn't required of the deal, the Dallas-based Lincoln Property Co. will continue to lease and manage its 1950s development at 8335 Westchester Dr., which was renovated in 2000. Creekstone Management will act as asset manager. Upgrades are planned for the parking garage as well as adding some perks. Goldstein says valet parking for the restaurant lineup is under consideration.

"We will be pushing Lincoln Property to aggressively market and fill that space," Goldstein says, adding the quoted rent will remain $28.75 per sf for now. The 30-plus tenant roster has limited lease roll for the next five years, he confirms. Preston Center Pavilion and Square, sitting in a one-mile trade area with an average annual income of $193,037, has had an occupancy of 90% or more for the past decade.

Goldstein says the TIC win of the landmark asset is proof that "there is a substantial amount of investors with a high trade, they want to be in retail and they want to be in Dallas." Creekstone's playbook calls for $50 million to $75 million, maybe more, to land in Dallas/Fort Worth this year out of a commercial buying pool of $500 million to $600 million. The firm's also earmarked another $300 million to $400 million for multifamily acquisitions.

Goldstein says he's not holding anymore contracts in North Texas, but he is negotiating for a large office building in Dallas plus has contracts pending in Houston, Cincinnati, St. Louis, Denver, Nashville and Charlotte, NC. The TIC group's planned hold is five to seven years.

Holliday Fenoglio Fowler LP's managing directors Barry Brown and James Batjer brokered the sale for the joint venture sellers, Lincoln and the Parsippany, NJ-based Prudential Real Estate Investors. The new owner is a division of Creekstone Cos., which focuses on acquisition and management of class A office, retail and multifamily properties.