Younan Takes 2M SF in $270M Deal

The Transwestern portfolio includes three office towers in Dallas and four buildings in Chicago. Younan has closed on six of the buildings, with a seventh due to close in November.

Younan tells GlobeSt.com that the company, which has exited the Los Angeles market, sought the Transwestern portfolio because Dallas and Chicago are two of the office markets where the company sees the most promise. "We see a consistent and significant absorption in Dallas and Chicago," along with job growth that bodes well for the office markets in both cities, Younan says.

Younan sees upside in the Transwestern properties by raising rents and occupancies in the seven buildings, which overall are about 82% occupied. That compares with an occupancy of 90% in the entire Younan portfolio, including the newly acquired Transwestern properties.

Rents at the Transwestern buildings are below market because Transwestern bought the buildings in early 2000 when the market was soft, Younan explains. "They've done a great job leasing them, but our No 1. priority will be to turn over some of the leases and bring them to market," the Younan Properties CEO says.

With the purchase of the seven buildings from Chicago-based Transwestern, Younan will own 12 office properties totaling 4.7 million sf in Dallas and eight Chicago assets totaling nearly two million sf. Its 7.5-million-sf US portfolio now totals 24 buildings, which will grow to 25 buildings totaling 7.8 million sf when the sale of the seventh Transwestern asset closes in November.

Younan was considering an initial public offering earlier this year, but Zaya Younan now says that plan has been put on hold. Recent deals like the private buy-outs of Arden Realty and Trizec Properties demonstrate that commercial real estate owners can realize higher valuations for their properties these days in the private markets, he explains.

For now, Younan's strategy is "to focus on the growth of the company," with a view to becoming one of the largest commercial real estate companies in the country, Younan says. To that end, he says, the company is concentrating on key markets like Dallas and Chicago.

The Dallas assets that Younan bought from Transwestern total approximately one million sf. They include three buildings called Energy Square I, II and III at 4925 and 4849 Greenville Ave. and 6688 N. Central Expressway.

The Chicago assets are 1600 Corporate Center at 1600 E. Golf Rd. in Rolling Meadows, Bannockburn Corporate Center at 3000 Lakeside Drive in Bannockburn, Kensington Corporate Center at 1160 Feehanville Dr. in Mount Prospect and 200 N. La Salle in the Loop. The 200 N. LaSalle building sale is scheduled to close Nov. 9.

Younan represented itself in the acquisitions. Transwestern was represented by Steve Livaditis and Blake Johnson of Eastdil Secured in the Chicago acquisitions and by Andrew Levy of Holliday Fenoglio Fowler LP in the Dallas deals.