Equastone Spree Bags 317,472-SF Office Deed

Unlike its other Las Colinas deed, the Urban Center prize at 220 E. Las Colinas Blvd. is 74% leased. "The Las Colinas submarket is really strengthening relatively quickly," says Jeff Schindler, Equastone's chief investment officer. "There are large tenants in that market and large tenants looking to get into that submarket." The sweet spot, though, as he points out to GlobeSt.com, is the lead tenant, VHA Inc., controls 70% of the eight-story building with a lease that runs for least five more years.

"Our intention," Schindler says, "is to bring it up to 92% or 93% over the next couple years and then sell out with a nice long period of time left on the anchor's lease." He says the anticipated hold is three to five years.

Schindler says about $500,000 will be put into polishing the lobby and approach as its new team, Tracy Fults, Jamie Galati and Joanna Hagerty with Cushman & Wakefield of Texas Inc., ramp up the leasing and management plan. Schindler says the largest open block is pushing 50,000 sf; the balance is infill spaces. "There's no significant roll for many, many years," he adds.

Schindler says the VHA Place's tenancy makes it a slightly different play from its mid-July acquisition of a 225,000-sf, 10-story building at 5615 High Point Dr. But, the anticipated hold is about the same. According to Equastone's account, the submarket's dynamics--968,000 sf of absorption in the second quarter and 17.1% vacancy--are keeping Las Colinas on the "buy" list. "We are looking at other potential opportunities in Las Colinas and our other targeted markets," he says.

Equastone chairman David Bourne credits the state's economy with getting so much of its attention and capital. He says they've tapped into below replacement-cost deals in an environment that's not significantly threatened by new construction and one that's growing due to rising oil prices. "The Texas economy is recovering rapidly so we expect rental rates and values of existing buildings to rise significantly over the next four years," he says. Since October 2005, Equastone has amassed 1.6 million sf in value-add office and flex properties and set up a regional office in Houston, seating veteran Clint Harrington as its executive vice president.

Hartford-based UBS Realty Investors had C&W's Andrea Peskind and Brad Thornburg marketing the asset. The seller bought the 3.5-acre, canal-fronting property in June 2002 from Aetna Life Insurance Co. of Carlsbad, CA.