IRVING, TX-Bandera Ventures Ltd. has sold the 220,471-sf Waterway Tower in the Las Colinas Urban Center after a two-year hold to Cornerstone Real Estate Advisors LLC, leaving upside in the value-add play for the new owner. Street calculations put the exchange of the 80%-leased, class A footprint at more than $100 per sf and less than $150 per sf.

Bandera’s plan, seeded with equity from New York City-based Lehman Brothers Inc., all along was to reposition the 13-story Waterway Tower at 433 E. Las Colinas Blvd. and its sister, the 10-story, 238,320-sf Canal Plaza at 400 Las Colinas Blvd., bought in one fell swoop from Fidelity Investments LP. Bandera started its play with 12% occupancy in Waterway Tower and an empty Canal Plaza. The locally based Bandera tested the market once before with Waterway, but pulled it when nibbles weren’t high enough, sources recall.

But the times have clearly changed in Las Colinas in the past six months, with rents and occupancy steadily rising to pre-2001 levels or higher in some cases. This time, Waterway Tower reeled in at least a dozen offers in a marketing focused on the value-add that Bandera left in the deal, says CB Richard Ellis vice president Gary Carr, who teamed with colleague Russell Ingrum to steer the sale.

The Hartford-based Cornerstone, an affiliate of Massachusetts Mutual Insurance Co., hasn’t bought office product in the region for a couple years, but its offer was clustered at the top with several others who wanted a piece of the Urban Center, Carr tells All that he can reveal about the sale price is it was below replacement cost.

“Cornerstone still has the ability to stabilize the property through the remaining leasing and if they desire to exit,” Carr says, “they could still exit below replacement cost. That’s what makes it attractive.”

Bandera, for now, is firmly tied to Canal Plaza, which remains empty. But, there is consideration to divvy the space for two tenants rather than continue to hold out for a single user, says Ben Sumner, managing director and partner for Dallas-based Stream Realty Partners LP.

Since Bandera bought the pair, Waterway’s running with practically all new leases and new quotes now into the low $20 per sf range. The owner’s biggest catch for the repositioning was Comtel Telecom Asset LP’s eight-year lease for 84,674 sf. “There are just a handful of vacant spots,” Sumner says. “And, that building doesn’t have a lease roll problem.”

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