Dallas JV Stages Coup for 1M-SF CBD Trophy

The 50-50 joint venture buyers won't discuss the price. The 2200 Ross Ave. trophy and 14-story parking garage are assessed at $194 million, according to tax records.

Stream's ties to the building began 17 years ago when co-founders and co-managing partners Michael McVean and Lee Belland, then junior agents with Trammell Crow Co. were given the leasing assignment. In August 2004, Stream made local history when the owners, Equitable Assurance Society and Japanese insurance company affiliate Nissei Realty, pulled the leasing reins from their one-time partner in the building, TCC.

"It was the goal of the owners to reposition and sell it," McVean tells GlobeSt.com. "We'd repositioned the building and then said 'we'd buy it.'" The deal funded and closed yesterday in a four-month spin, with backing from 1031 exchange funds from a five-building sale in the San Francisco Bay area and a MetLife loan.

"My first job was leasing this building," McVean says. "I'm still trying to get my arms around what I'm supposed to feel. I'm a little dumbstruck."

Stream's headquarters take up the top two floors of the 55-story landmark. Highland isn't planning to move its 100,000-sf headquarters and NexBank operations from Galleria II in North Dallas, but is planning to fill some of the trophy's vacant space."We will definitely move some operations there," Davis Deadman, investment adviser for the Highland Real Estate Fund. "We are growing so fast that we're going to have to make a decision in the next few months."

Highland Real Estate Fund is a hedge fund for Highland Capital Management LP, a $26-billion money manager with $2 billion of real estate assets in its portfolio. Deadman says Highland's stake came from an on-shore account with domestic investors. The MetLife package, arranged by Tim Jordan with Holliday Fenoglio Fowler LP in Dallas, was "a standard market loan with standard market terms," he adds. The hold will hinge on the market and when the investors want to cash in, according to Deadman.

Chase Tower isn't the largest office property in the Highland portfolio, but it is its largest in Dallas/Fort Worth. It is Stream's largest piece of real estate.

Deadman says he was hesitant at first when McVean and Belland broached the subject although they've often teamed in the past, including the California portfolio. "The Downtown office market is among the worst and the least healthy in the country. But, you have to believe in that part of the Downtown and believe in the asset," Deadman says. "And, we needed some office space. I like the hole at the top of it. You can't beat that view, the structure and the look. It's my favorite building Downtown." The Arts District landmark, developed in 1987, was designed by Richard Keating of Skidmore Owings Merrill LLP.

The lead tenant, naturally, is the bank, which occupies about 200,000 sf; other top space takers are law firms Locke Liddell & Sapp and Fulbright & Jaworkski plus Deloitte. McVean says the roster, with nearly 40 tenants, has no rollover until 2010.