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DALLAS-Promising to set a new high for sales in the city, Fortis Property Group has hit the market with 2.3 million sf of trophy space that it’s bought in the past 18 months. Given market conditions and the deal’s dynamics, it’s predicted the package could fetch $600 million.

A mid-November call for offers is planned for the 96%-leased space. Up for sale are Galleria Towers I, II and III, totaling 1.4 million sf, and a 1.5-acre tract for the proposed 288,000-sf Galleria IV in North Dallas; the 351,248-sf JPMorgan International Plaza III at 14241 Dallas Pkwy.; and NEC Corporate Center, a 526,000-sf single-tenant campus at 655 N. State Hwy. 161 in Irving.

Jones Lang LaSalle’s managing directors John Alvarado, Jack Crews and Evan Stone, all in Dallas, will team with JLL international directors in Washington, DC, London, Dubai, Sydney and Tokyo to scour the globe on a “face-to-face” basis for a portfolio buyer. “It has a good chance to go to a single-entity buyer,” Alvarado says. Individual offers aren’t being ruled out for the buildings or the development site at the corner of Montfort Drive and Alpha Road beside the 1.4-million-sf Galleria mall.

During its short reign, Brooklyn, NY-based Fortis has enhanced the properties and raised rents like its neighbors, building in value for the next owner as leases roll. “They’ve proven the properties have significant upside,” Alvarado says.

In addition, Alvarado says there are two assumable loans at below-market rates. The Galleria properties have an interest-only loan at rates that “are difficult, if not impossible, to find in today’s market. The terms are very attractive in comparison to what is available in the market today,” he tells GlobeSt.com. “I think certainly there is significant value from the existing debt. However, the properties themselves are premier.”

The 13-story JPMorgan International Plaza III is 71% leased; it was nearly one-third empty when it was bought in March 2006 by Fortis and Mizrachi-Alcaly Group of New York City. Its rates are up to $26 per sf to $27 per sf plus electric.

Fortis bought the Galleria prizes in November 2006, pushing occupancy to 98% and rates to $28 per sf to $30 per sf. Alvarado says the majority of leases is below market, with upcoming 10% to 15% annual rolls for three, possibly four years.

The 25-story Galleria I, situated at 13355 Noel Rd., totals 468,750 sf. The 24-story Galleria II at 13455 Noel Rd. has 430,045 sf. And, the 26-story Galleria II, at 13155 Noel Rd., has 519,675 sf. “The additional development potential for Galleria IV is considered one of the most compelling proposals in the market,” Stone says in a press release.

Crews says the selling points of below-market in-place rents and vacancy at JPMorgan International Plaza III “allows a new owner to capitalize on market-leading absorption trends and rapidly improving rental rates.”

There is no edict from Fortis to sell before year’s end. “But we are going to run a pretty fast-tracked process,” Alvarado stresses.

Chicago-based Equity Office Properties and Crescent Real Estate Equities Co. of Fort Worth have hawked large portfolios at record or near-record prices in the city. But, as Alvarado points out, the assets have gone to multiple buyers. He says the Fortis sale is a prime candidate for a single buyer due to asset quality and the JLL international directors’ circle, of which seven are dedicated to the capital markets team. “This is a portfolio that should receive significant interest from international buyers,” he contends. “This could set a record.”

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