DALLAS-With a caution that the deal is still tentative, the Orlando, FL-based CNL Income Properties Inc. has put out word it's negotiating to buy majority interest of the 4.8-million-sf Dallas Market Center. If the deal closes, CNL will invest up to $71 million in cash into a new partnership.
Dallas Market Center Co. Ltd., an affiliate of locally based Crow Holdings, and CNL plan to form a partnership with $160 million of debt and $89 million of equity, according to a press release issued this morning. The partnership will own part of the real estate and leasehold improvements in the 3.1-million-sf World Trade Center, one-million-sf Dallas Trade Mart and 440,000-sf International Floral and Gift Center and a leasehold interest in the 214,000-sf Market Hall.
More details will follow, but Crow is poised to turn over up to 80% of majority interest in the center. Gina Norris, managing director of Crow Holdings, tells GlobeSt.com that CNL approached Crow Holdings about nine months ago about the possibility of a buy-in. "It has come fairly quickly for a deal of this size," says Norris, who's working with Anne Raymond, Crow's managing director and CFO, to fine-tune the trade. The closing, set to begin this quarter, is subject to CNL securing additional offering proceeds.
CNL's release says the tentative agreement will set up two long-term master leases with the existing management company, Market Center Management Co. Ltd., which will continue to manage the business, including the world-renowned trade shows. Banc of America Securities is CNL's financial adviser for the transaction.
"This real estate transaction provides a strong equity partner and positively positions us for additional opportunities to create improved markets and trade events," Bill Winsor, Dallas Market Center's president and CEO, says in the release. "To the extent other such opportunities arise that align with our business strategy, we would be pleased to further our relationship with CNL Income Properties." Among its mixed bag of high-profile holdings, Crow also owns the three-million-sf Brussels International Trade Mart.
Founded in 1957, Dallas Market Center now is considered the world's largest wholesale merchandise mart. More than 50 trade shows are held annually, attracting at least 200,000 visitors from 84 countries. Last year, five floors in the World Trade Center were retooled into FashionCenterDallas, a state-of-the-art wholesale mart with 550 permanent showrooms and more than 650 temporary apparel exhibitors.
"Our partnership with Dallas Market Center is a good fit with our investment strategy," R. Byron Carlock, CNL president, says. "We're focused on this country's most prominent demographic influence--baby boomers--who, we believe will be spending even more of their time and income on themselves and their families as they continue to mature. We believe boutique and specialty shopping will be a big part of that trend."
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