DALLAS-In a 40-day start to finish, Parmenter Realty Partners has grabbed title to an 845,919-sf piece of a North Dallas office park from a JP Morgan-backed investment group. The deal closed with a $64-million loan that includes reserves for a $4-million cap-ex program and lease-up of the 92%-occupied Towers of Park Central VII, VIII and IX.
The Miami-based buyer got an extra 1.4 acres of developable land in addition to the 11-acre block holding the three class A towers along Merit Drive. Steve Bronner, managing principal in the Southwest and Central US for Parmenter Realty, tells GlobeSt.com that the plan calls for a five- to seven-year hold, with the fate of the land still up in the air in terms of development or resale.
Bronner says the value-add lies in the upside to be made from the uptick in the LBJ Freeway submarket now that the High Five road project is complete. "That submarket got hammered by the High Five," he adds. "The play on this deal is the market is re-stabilizing and rents will go back to where they were." Rents are running in the mid- to high $19 per sf rents, but he predicts they will soon break the $20 per sf mark and edge higher.
"I've always kept my eye on Park Central," Bronner says. "I felt the timing was right with the construction's completion. It's a bet on that location and a new access to the area."
The capital improvement plan will be spread over three years, with some work scheduled to begin immediately, according to Bronner. "We have significant improvements planned for the project," he says. Sarah Buckles, formerly with Transwestern Commercial Services in Dallas, has been hired as the on-site leasing manager while Parmenter intends to manage the asset, as it does its other Dallas properties. The new owner's plan includes moving its regional office from Preston Center to one of the towers.
The Towers of Park Central is the third acquisition for Parmenter Realty Fund III, a $250-million buying pool predominately earmarked for Texas and the Southeast. Parmenter, on average, will do 70% to 75% leverage.
The financing was arranged by Charles J. Foschini, senior director in CBRE|Melody's South Florida Office, Christian R. Lee, executive vice president for CB Richard Ellis' Institutional Group and Christopher Apone, associate for CBRE's Investment Properties Group. Foschini says the five-year loan includes lease-up reserves and cap-ex funds at interest-only payments at a fixed rate of slightly more than 5.5%.
Foschini says there were several lenders lined up for the deal, but the New York City-based Lehman Brothers' "flexibility of terms and ability to deliver in a very short timeframe gave Lehman the edge." The loan went full circle in 40 days. "We had an extremely focused buyer and lender," he says.
Evan Stone with Jones Lang LaSalle in Dallas had the asset on the market without an ask. Bronner says the contract went down in November and the deal closed as scheduled on Dec. 20. It was the third deal between Parmenter and JLL's Stone. And the win, Bronner says, was made because "they have a high degree of confidence in our ability to close."
The complex, which neighbors a Westin Hotel, includes a 50,000-sf health club and sports bar. Park Central VII at 12750 Merit Dr. is the largest of the trio, with 14 stories and 365,868 sf. Park Central VIII at 12770 Merit Dr. is 10 stories with 266,214 sf while Park Central IX is an eight-story design, totaling 213,837 sf, at 12790 Merit Dr.
The complex's roster contains three headquarters tenants, including Unitrin Business Insurance, a unit of Chicago-based Unitrin Inc., which provided an on-site cafeteria for its team and other Park Central tenants. The complex includes a deli. Built in the early to mid-1980s, the complex underwent a $3-million renovation in 2005.
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