Passco Bags Its First Texas Retail For $30M

Passco actually beat the 45-day time limit for the 13.3-acre center at 801 W. 15th St. in West Plano, according to Paul Mittmann, vice president of acquisitions for the Irvine, CA-buyer. "We've done a couple of deals with Rreef before. We were rather aggressive," Mittmann tells GlobeSt.com. "We were willing to do what it takes."

Mittmann says the hurdle to overcome was a loan defeasance. The San Francisco-based Rreef had assumed a $21-million loan with 10 years left on the term when it bought the center in December 2004 on behalf of a large public pension fund from Dallas-based Director Development. Mittmann adds that Passco's team had done several defeasances before so it was relatively smooth sailing to get the deal done by deadline. In addition, he says Passco did a 70% loan-to-value financing through Citigroup, getting the capital in a 10-year note at slightly less than 5.5% for the fixed-rate interest.

Jack Crews, now a managing director for Jones Lang LaSalle in Dallas, and his former Trammell Crow Co. colleague, Ken Bendalin, now a vice president for locally based Staubach Co., brought Creekwalk Village to market without an ask. Local sources say they got at least a dozen offers for the power center.

"Rreef did a great job of owning and operating that property, with zero deferred maintenance," Mittmann says. "We got a good going-in price and good price per sf."

Mittmann says the planned 10-year hold will naturally generate upside from lease structures that he labels as "dated" as six large tenants work through long-term lease that have been in place since Creekwalk Village was built in 1994. Barnes & Noble's lease rolls in 2010 and 50% of the others turn over after 2014. Other anchors are Bed, Bath & Beyond, Old Navy, Petco, DSW Shoe Warehouse and Michaels.

Creekwalk Village's location as well as its lineup was responsible for the strong buyers' interest. The power center sits at the epicenter of a six-million-sf trade area at the northern entrance of the 1.1-million-sf Collin Creek Mall. Mittmann says it's undecided who will lease the new prize, but Dallas-based Venture Commercial LLC will be managing it.

Mittmann says it's taken awhile for Passco to get its first retail although it has bought several multifamily assets in North Texas in recent years. The criteria are stabilized returns. "We'd love to buy more," he says. "It doesn't make any sense to own one asset there."