GlobeSt.com UPDATE: REIT Ready to Buy Some More

DALLAS-A newly formed Canadian REIT intends to close a second equity issue in six to eight months to continue mining opportunities in the western tiers of its homeland and the US.

“We have every intention of growing our REIT into a larger REIT in a dramatic way,” Arthur Lloyd, COO of the Calgary-based TGS North American REIT, tells GlobeSt.com. “We have a strong pipeline of transactions and good access to capital.” To date, the REIT’s first issue, a $435-million transaction, has cornered deeds to five office buildings and four retail properties in the targeted western markets.

Lloyd and CFO Lloyd Wiggins confirmed the next closing will be “in a month or so.” TGS has a suburban office building in Houston under contract and that’s all the duo is saying for now about that deal, but they are willing to talk about the deep-pocketed buyer’s coming out.

TGS, backed by Canadian capital, will be acquiring “good real estate in major markets with durable cash flow and high current yields,” says Lloyd. The class A catches will be geographically diverse, Wiggins adds. And now that the dust has settled on the flagship deal, the plan is to add industrial product to the buying strategy.

So where is the focus? Watch the Texas metros of Dallas-Fort Worth and Houston as well as Denver, Phoenix and Seattle, Lloyd and Wiggins say. The cities’ common thread is that all have good underlying economic bases with weakened tech markets–a combo that could evolve into a good harvest for a savvy buyer.

“This is not a speculative play in that we’re buying empty office buildings and then looking to fill them,” Lloyd emphasizes. Credit-worthy tenants, historically stable markets and class A caliber are the criteria that curry favor with the heavily endowed REIT.

Lloyd says TGS underwrote 37 properties before settling on the nine bought in the first round. He confirmed Chicago-based Trizec Properties Inc.’s Renaissance Tower, a 1.7-million-sf landmark at 1201 Elm St. in the Dallas CBD, was among those being eyed for the initial buying spree, but wouldn’t go into detail as to why the sale never made it to the closing table. Instead, the first Texas deeds were Archon Group’s 510,000-sf headquarters at 600 Las Colinas Blvd. in the Las Colinas Urban Center, which sold for $52.75 million or about $102 per sf for a building with a replacement cost estimated at $180 per sf, and Houston’s 396 West Greens, a 186,791-sf office building that reaped $24.5 million for Westbrook Partners of New York City. For previous story, click here