Hines REIT Makes $28M Bet on 218,943-SF Citymark Building

There's no pressure to address the condo question since Centex still has five years left on the lease term for 76%, or 166,022 sf, of the Citymark Building at 3100 McKinnon St. Meanwhile, the Fortune 250 company is waiting in the wings to take over another 9,011 sf of the class A space before July 31, 2006, getting dibs on an upcoming opening in a fully leased landmark positioned at the epicenter of the city's top-dollar residential and office district.

"Hines has a good opportunity to sit there as the neighborhood grows around it," Russell Ingrum with CB Richard Ellis Inc. in Dallas tells GlobeSt.com. "When the Centex lease rolls, they'll have a lot more options."

The 11-story building stirred up a lot of interest, all from office buyers, says CBRE's Gary Carr. He and Ingrum started running the deal in 2002, then withdrew it from the market. The building houses Centex's headquarters operations for its construction, mortgage and title divisions.

Ingrum says it was recognized all along that "if the right situation came along, they'd be an interested seller." Hines' senior vice president Clayton C. Elliott presented the right offer at the right time, adds Ingrum, whose team included CBRE's Eric Mackey.

Centex acquired the building in 1999 from Washington, DC-based CarrAmerica Realty Corp., which bought it from a local partnership that scooped it up from the Resolution Trust Corp. Should a conversion be in the cards for the asset, assessed at $21.2 million by Dallas County, it's already boasting balconies, a three-story lobby, full-service cafe and attached parking garage.

At this time, Hines REIT president Charles Hazen says there are no renovations planned for the three-acre foothold, but it is intended to be part of the portfolio a long time. "It's an attractive long-term investment for us because of its location in the Uptown district of Dallas," he says.

Hines will manage and lease the building for the Houston-based public REIT sponsored by Hines. According to the SEC filing, Hines' management fee will equal 2.5% of the annual gross revenues and the leasing fee is 1.5% of the gross.

According to the SEC filing, Hines tapped $22 million of a $75-million loan to buy the Citymark Building after amending the KeyBank vehicle eight days ago to provide bridge financing, payable Sept. 26, to acquire 1900 and 2000 Alameda del las Pulgas, office properties in San Mateo, CA. The floating-rate, Libor-based loan kicked in at 5.98% interest. The SEC filing says Hines REIT is now in talks with a bank to provide a revolving credit facility so it can retire the KeyBank loan and corner some extra for future acquisitions and working capital.