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FORT WORTH-Prescott Realty Group, fueled by a $21-million acquisition loan, has made a slam-dunk play with a local seller for the 241,250-sf Summit Office Park in the CBD. There is an additional $5.6 million of “good news money” built into the off-market deal to cover renovation and leasing costs.

The Dallas-based Prescott has been scouring the Downtown and the West Side for the past two years after selling all that it owned in the city several years ago. “We like Fort Worth. We are continuing to poke around for other opportunities, says Judson Pankey, Prescott’s CEO. The eight-story twins, situated at 1200 and 1300 Summit Ave., are 93% leased to 51 tenants.

The acquisition, which includes a three-story parking garage on the nine-acre tract, hits the investment group’s sweet spot–boutique, infill properties with smaller tenants in the space. Rick Hopwood and Ashley Brown with NAI Huff Partners in Fort Worth have been hired to lease the buildings; Prescott will manage them. “We are going to renovate it and bring a little more attention to its detail and let our local staff give the tenants some TLC,” Pankey says. Upgrades to the lobby, common areas and chiller system will get underway in 60 days.

Lance Wright, regional director for GE Real Estate, tells GlobeSt.com that Prescott’s principals were under a tight deadline and hard on earnest money with four-year owner, Klabzuba, when they turned to the Norwalk, CT-based lender for financing. The closing papers were inked 23 days later, thanks to an on-book loan from GE. “We have money to place. It’s our own money and we have a large balance sheet,” Wright emphasizes, adding the financial markets’ turmoil has flung open the door for on-book loans.

“There is $50 billion to $60 billion of paper out there to be sold. Until that’s sold, it’s tough to get a higher leverage loan,” Wright says. “Lenders like GE are well positioned to provide debt. We are very busy and are having a record year.”

Wright says Prescott inked a five-year loan at a sub-7% fixed-rate interest. GE has fully funded a $5.6-million reserve pool, known in the industry as “good news money,” to cover renovations, leasing commissions and tenant improvements.

Lender and buyer alike say the city’s high office occupancy, steadily rising rents and limited construction are seeding the play. “They’ve got a great infill asset with rollover,” Wright says. “We think there’s upside in the rents.” Summit Office Park is quoted at $18.50 per sf.

Pankey says the buildings’ rosters are stable for a couple years, with rollovers picking up in the third year. As leases come due, the plan is “to try and meet the market,” he says, “but our focus now is going to be the capital improvements for the building.”

George Duncan, senior vice president in Staubach Co.’s Fort Worth office, put the deal on Prescott’s table. Holliday Fenoglio Fowler LP managing directors Andy Scott and Steve Heldenfels in Dallas were the mortgage brokers.

Pankey and his partner, Vance Detwiler, are mining other opportunities around town, including land acquisitions for mixed-use projects. “This is the first one that really hit,” Pankey says. “We were lucky to be able to grab it.”

Fort Worth is known for being a close-knit circle on most professional fronts. Pankey first bought properties in town in 1991. Five years later, he and partner Vance Detwiler, a Fort Worth native, picked up additional real estate under the Prescott Realty banner and then sold it a few years ago. “This gets us back into Fort Worth. We feel fortunate to get in,” Pankey stresses. “Some institutional owners don’t like Fort Worth, but we always have.”

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