Op Fund Places $28M Bet on Value-Add Assets

The end-of-the-year wins are the 138,448-sf Bent Tree Green at 17300 Dallas Parkway and 240,000-sf Las Colinas Commons, a three-building asset at 1525, 1555 and 1621 W. Walnut Hill Lane in Irving. Bent Tree Green, the last asset in Chicago-based CMD Commercial Realty Group Inc.'s local disposition, went for $12.3 million and Las Colinas Commons, sold by an affiliate of locally based Crow Holdings, brought $15.9 million, according to SEC documents.

Jason Mattox, Behringer Harvard's executive vice president, will only say that the prices are "well below replacement costs." Bought with funds from Behringer Harvard Opportunity REIT I, both assets will be three- to six-year holds. "We're buying these to take advantage of market improvements, improve the assets and take advantage of the great locations that they occupy," Mattox says, adding the plan calls for a "proactive repositioning to claim the highest rents of their competitive sets."

The new owner is still fine-tuning overhaul costs, but is planning to put significant capital into repositioning the duo. Bent Tree Green, with 19 tenants, is 70% leased; Las Colinas Commons, with four tenants, is 67% leased.

Bent Tree Green is situated in far north Dallas, where several class B properties have changed hands since last fall as investors juxtaposition themselves to mine the upside in the category due to rising class A rents. "We think we can transform this asset and that it will be attractive to class A tenants," Mattox tells GlobeSt.com.

Bent Tree Green's upgrades will include the lobby, common areas, mechanical systems and amenities to "bring it in line with newer properties in the submarket," Mattox adds. "We hope to approach a solid class B or B plus." Bent Tree Green, built in 1983 with underground and surface parking, is positioned on 3.4 acres overlooking Bent Tree Country Club.

Mattox says the same approach will be used on Las Colinas Commons, situated in the Las Colinas Office Center. The trio was built from 1979 to 2001 on 17.2 acres with surface parking for 1,155 vehicles. First Horizon Home Loan Corp. occupies 73% of 1555 W. Walnut Hill Lane, a 162,000-sf structure built in 1981 and renovated in 2002 along with the 62,000-sf sister at 1525 W. Walnut Hill Lane. The 15,000-sf office building at 1621 W. Walnut Hill building is five years old.

Behringer Harvard has put Capstar Commercial Real Estate Services of Dallas in charge of leasing and management for both properties. The tenants' leases, across the board, are "not as long term as a core asset, but we have in place good credit tenants," Mattox says. "We have an opportunity to attract tenants to eliminate the vacancy and do so in a way that attracts higher rents within the submarket." Space in Bent Tree Green runs $18 per sf to $19 per sf plus electric and Las Colinas Commons, $13 per sf to $14 per sf plus electric.

Cushman & Wakefield of Texas Inc.'s team of Andrea Peskind and Brad Thornburg marketed Bent Tree Green. CB Richard Ellis' Gary Carr and Russell Ingrum brokered the Las Colinas Commons sale.