Vista Property Emerges From Major Retail Split

"It was best for him, best for me and best for Direct Development on a go-forward basis," Hurley tells GlobeSt.com. "It was a hard thing to do. The law of averages caught up to us. It was an extraordinary partnership for 10 years."

Hurley's Vista Property Co. is opening doors in 6,000 sf in NorthPark Central along North Central Expressway, with his 20-year assistant Karen Pierson at his side along with Derek Ferem, Direct Development's former marketing director who will oversee Vista's project leasing. The firm's CFO will be Keith Heil, former head of property management for vehicle dealership giant, David McDavid, and his real estate arm, DMc Properties. Carl Gossett, also from the David McDavid camp, is Vista's controller.

Hurley plans to be a primary investor in the Hispanic retail market, specifically redevelopment opportunities and perhaps some ground-up. "That's where we see the greatest opportunities right now. We're at the beginning of a new trend," he says. "It will run for awhile and hopefully by then, we'll see the next trend and hop on it."

To set the plan into motion, Hurley will own the 140,000-sf Sierra Vista at the corner of Illinois Avenue and Westmoreland Street in Oak Cliff on an outright basis. It was the first Hispanic-targeted shopping center that the development duo undertook, putting in a Carnival food store as the anchor.

Hurley says a 35,000-sf phase two will break ground in mid-September, with a 24,792-sf anchor, DD's, a Hispanic-oriented concept of the Pleasanton, CA-based Ross Stores Inc. Jim Tapp with Tapp Co. in Dallas is DD's point man.

Sierra Vista, marking its one-year anniversary, "has been a roaring success," Hurley says. "It's been a good experience leasing Sierra Vista. We've got a lot to learn, but our background allows us to do that. We will take our operating expertise and have it translate into investment performance in this market."

In divvying the Direct Development portfolio, Hurley will own roughly 500,000 sf and control a four-property fund launched last year. Hurley says the transition at the properties will begin in September.

Watson gets ground-up works in progress in San Marcos, Austin, Harker Heights and Dallas plus oversight for four other retail properties. Watson was on vacation and unavailable for comment prior to press time. When the dust settles, Direct Development will have a 30-member team and offices in Dallas and Austin.

"He bought me out of Direct Development and part of the way it's structured is I'll be a passive investor in all the deals they do for the next several years," Hurley explains.

The first real estate to be shed was the "tail end" of a deal from last year's sale of the 350,000-sf Highlands Ranch at Long Prairie and Justin roads in Flower Mound to their San Francisco-based partner, Rreef North America. The deal closed three days ago.

Hurley says a 30,000-sf, multi-tenant building at Montfort and Alpha roads in North Dallas is under contract. And next week, a buyer will be selected for the 39,818-sf Highland Commons at FM 222 and Airport Boulevard in Austin.

As the fund's managing partner, Hurley says it's on track to "hopefully" close out by year's end. Then, he plans to launch a second fund. The existing fund owns a 25,000-sf Auto Zone-anchored center in Pleasant Grove, bought in June; 160,000-sf North Fork Plaza at the junction of Texas 45 and 183 in Austin, which is under contract to a related partnership of the former partners for redevelopment and expansion into a power center; 35,005-sf Grape Vine Market at Anderson Lane and MoPac Boulevard, also in Austin; and 37,000 sf of street-level retail space in Boca Raton, FL-based Gables Residential Trust's 141-unit Fifth Street Commons, an Austin project ticketed to deliver in late 2008.

In addition to Sierra Vista, Hurley's stake includes 55,221-sf Preston Village at Preston Road and Dilbeck Street in North Dallas, which has two deals working for the 5,000-sf vacancy. Hurley says it's undetermined whether to hold or sell after it hits 100% occupancy. He also gets the 20,000-sf Midway Commons, also in North Dallas at Midway and Alpha roads, which is in its final lease-up stage, and the 165,000-sf Eldorado Crossing at FM 423 and Eldorado Parkway in Little Elm. It too could come up for sale.

"This is the equivalent of a business divorce," Hurley stresses. "But, it was a business transaction. It didn't drop to a personal level."