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DALLAS-Rreef, acting for a large public pension fund, has outbid a bevy of buyers for a class A infill portfolio, which came to market with 480,583 sf in four shopping centers and traded as a package of three. The one drop-off most likely will return to market in the first quarter.

Still, the San Francisco-based Rreef got 433,065 sf of 99.9%-leased retail space from Direct Development of Dallas. The caliber of properties in the package, tied to different partnerships at sale time, was one of the most closely watched trades since its market debut in July. Rreef has locked down the price, but sales of comparable assets have been trading for $130 per sf to $150 per sf. When it hit the market, its broker, Chris Cozby, principal with Dallas-based Trammell Crow Co., valued the entire package at $120 million to $125 million but Rreef vice president Brad Gries says it sold for significantly less than the campaign push. For previous story, click here.

In a turn from the norm, Direct Development, led by Syd Hurley and David Watson, will continue to lease and manage the properties for one year. “It was always a requirement of the transaction,” Hurley tells “It clearly was the right business decision to sell, but it would have been the wrong decision to gut our operating coming by selling its heart.”

The fully leased, 47,518-sf Village at Preston Hollow at 4343-4347 W. Northwest Highway in North Dallas was pulled from the stack because its lineup includes a dry cleaners, says Hurley, who predicts an early 2005 resolution with the state’s environmental agency. The plan, subject to change, is to offer it first to Rreef if the partnership pushes ahead on the sale of a 20-year-old center at an irreplaceable corner of West Northwest Highway and Midway Road.

What Rreef did get is the 169,217-sf Highlands of Flower Mound, the portfolio’s 100%-occupied crown jewel with no lease roll until 2008; 82,816-sf Addison Walk at 5000 Belt Line Rd. in Addison; and 181,032-sf Creekwalk Village at 801 W. 15th St. in Plano. The package has one 1,440-sf vacancy. But, Hurley says, there are already three retailers vying for the spot.

Hurley says the leasing and management hold ensures Direct Development’s operating company will have work to do until they replenish the portfolio. He says one property will drop off every quarter as Direct Development sets out on a course to replace space lost in the sale. “It will come on line as this rolls off,” he explains.

Hurley says Rreef assumed a $21-million loan with 10 years left on its term for Creekwalk and a $26-million package, with nine years to go, for Highlands of Flower Mound. Though viewed as a portfolio, the properties were tied to different partnerships so they were trading as separate deals. “Rreef was the outright winner on three of the four deals and was a very close second on the fourth,” he confides. “Rreef did what it needed to do to get the deal.”

Cozby says 10 offers went on the table for both Addison Walk and Highlands of Flower Mound while Creekwalk cornered seven would-be buyers and Village at Preston had 15 lined up. There were six offers on the table for the entire portfolio although it wasn’t marketed as such, he says.

“It’s a good combination of infill, proven retail markets as well as growth markets,” Gries says about the motivation for the hard chase for its only retail acquisition this year in Dallas/Fort Worth. “We like the real estate. It’s good stable cash flow and a little upside over the long term.”

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