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PLANO, TX-In a quid pro quo, Dallas-based Dunhill Partners Inc. has laid out “north of $15 million” for a 151,000-sf shopping center after the 20-year original anchor penned a pact to stay for another decade.

“We didn’t want to close on the property until we knew Bally’s was going to renew the lease,” William L. Hutchinson, Dunhill’s president, tells GlobeSt.com of the acquisition of Town Square Shopping Center at 900 W. Parker Rd. in Plano. The deal came together in three months, with Dunhill’s reputation for quickly closing what it contracts as the impetus for seller, Lennar Partners of Miami, to take the leveraged offer rather than one from another suitor lined up for the 14.5-acre holding at the southeast quadrant of Parker Road and Alma Drive, he says.

Randy Fleisher, managing director in Dallas for Houston-based LJ Melody, assembled financing that included nearly $2.2 million of preferred equity from Mountain Funding LLC of Charlotte, NC, and about $11.9 million in a five-year loan with a 5.3% fixed-interest rate from RBS Greenwich Capital Markets Inc. in Greenwich, CT.

Lennar acquired the asset about 1.5 years ago after taking back a portfolio with one retail asset and the balance in office product, confirms Jeff Coleman, Dunhill’s leasing director. Dunhill will undertake a $250,000 makeover, mostly cosmetic, and dedicate $100,000 to tenant improvements to fill Town Square, which was 93% leased at closing and now has edged to 95% with a pair of leases for a 2,800-sf bakery and 1,600-sf health food store beside the 30,400-sf Bally Fitness Center. The high-profile, 25-tenant neighborhood center still contains a half dozen retailers from the 1984 grand opening, a sure sign of its strength in the suburban market at an intersection with four corners of retail.

Hutchinson says the center’s leases roll at a rate of three to five per year for the next three years. The property, eyed as a three- to five-year hold, is getting $15 per sf in an area where the new owner controls three other retail deeds. “We have this center surrounded and we knew with our presence in the area that we could get working on this project efficiently,” says Hutchinson, whose portfolio now numbers 20 centers with three million sf of high-end retail.

The transaction marks a first-time equity partnership between Dunhill and Mountain Funding although the duo has an established borrower-lender relationship. It’s also Mountain Funding’s first equity stake in Dallas/Fort Worth. Arthur G. Nevid, Mountain Funding’s managing director of acquisitions and lending, says their last deal showed that “we are more aligned with Dunhill as a partner than as a lender. My hunch is this is a simpler method of investment and pretty much ends up at the same place.”

Leanne Weymouth of PM Realty Group, the center’s former leasing and property manager, negotiated the Bally’s lease. Hutchinson and Coleman brokered the buy side, which consists of a limited partnership fueled by in-house capital, other Dallas investors and Mountain Funding equity. Lennar’s brokers were Larry Casey and Doug Hazelbaker, both with CB Richard Ellis Inc. in Dallas.

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