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AUSTIN-Sage Land Co. and Capital City Partners LLC have secured $35.7 million of construction financing for the 116,000-sf Capstar @ Compass Plaza on the west side of the CBD. The class A building will be completed in late third quarter 2009.

The eight-story building at West 5th Street and Mopac Expressway is more than 90% preleased, according to Jim Lemos, principal with Austin-based Texas Realty Capital. Work began last week.

Lemos says preleasing was a prerequisite for the groundbreaking, adding he’s surprised that an office building west of Downtown has created so much demand. “This is in such a great location at the corner of West 5th and Mopac Expressway,” says Lemos, who teamed with Texas Realty Capital principal John Morran to arrange financing with Thrivent Financial for Lutherans of Minneapolis.

“Sage has been a client of ours for 15 years and has partnered with Thrivent on several developments in the past,” Lemos says. “It was just one of those situations in which all the stars lined up in the right place.” He adds that Thrivent is also kicking equity into Capstar @ Compass Plaza.

Sage Land has owned the site about 15 years, buying it at the same time as the 167,000-sf Hartland Plaza at 1717 W. 6th St. Its class A office building right across the street “stays very well leased because of its location and identity,” Lemos says.

According to Lemos, Sage put its plans for the site on the backburner for several years due to market fluctuations. But when Steve Hicks of Capstar Investment Partners needed consolidation space, Sage decided to team with Capital City Partners to put an office building on the land. Austin-based Susman Tisdale Gayle designed the building, which will house DMX Music Inc., Compass Bancshares Inc., Harden Health Care and its affiliate Girling Health Care, and Andrew Harper Inc. in addition to Capstar Investment Partners.

Lemos says Thrivent provided five-year, fixed-rate financing at an 82% loan-to-cost ratio. He says the debt is convertible to permanent financing. “The goal is to build this one, finish it, lease it up and put a permanent loan on it,” he adds.

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