118,000-SF Class A Building Draws $11M Plus

"It's a class A institutional-quality asset, but because it has leasing risk it was not a good fit for an institution," says SCM's Gary Walker, general partner of the local investment group who ended up with the deed to 2505 N. State Highway 360. Brookhollow Riverside was 75% leased at sale time. "We're confident with this submarket in knowing the leasing situation," says the president of the Arlington-based firm.

Walker tells GlobeSt.com that the acquisition strategy, based on a three- to five-year hold, was set into play with a five-year, interest-only loan at a 7.2% fixed rate and $1.5-million holdback to help with tenant improvements and leasing commissions. Brad Francis with Realty America Group in Dallas arranged the financing through GE Real Estate's Dallas office.

Walker says the nine-tenant building has no lease rolls this year or next. SCM Real Estate is marketing the open space at $19.50 per sf plus electric. The SCM team of Theron Bryant and Mark Lanier will lease and manage the 22-year-old building, respectively. The open space is being marketed at $19.50 per sf plus electric.

Brookhollow Riverside was pulled from the New York City-based Morgan Stanley's offering pack earlier this year when a 30,000-sf tenant moved out. John Alvarado, senior vice president for Dallas-based Trammell Crow Co., says the plan was "to allow the leasing people to try to backfill the space." Despite the lingering vacancy, the owner opted to try again because it wanted to close out the disposition, he says. A half dozen bidders were in the running, with Walker "coming on strong" in the second round, according to the deal's sole broker.

"It's a good high-quality building," Alvarado says. "This building gets good rental rates. The opportunity is there to backfill the vacancy on the top floor. The rest of the building is in good shape from a tenancy standpoint." The lead tenants are D&M Leasing, Farmer's Insurance Exchange, Molina Healthcare and Realty Mortgage Corp.

The Morgan Stanley sale included 10100 Central Expressway in Dallas, which went to Millennium Office Properties of Dallas; Brookhollow II at 2221 E. Lamar Blvd. in Arlington, bought by Alan Kaufman of Farmington Hills, MI; and Centennial Towers at 505 E. Huntland Ave. in Austin, sold two weeks ago to San Diego-based Equastone. Alvarado says the package originally was marketed as a portfolio, but "we found we needed to sell them individually because they had different profiles."

For SCM, Brookhollow Riverside is its second acquisition in the past month. It also acquired the 57,167-sf Lamar East Atrium, a two-story building at 1601 E. Lamar Blvd.