CapRidge Partners received a $30.9 million loan from Mesa West for the acquisition and stabilization of Gramercy Center, a 255,0000-square-
Gramercy Center is located at 18451 and 18581 North Dallas Parkway and comprises two high-quality, low-rise office buildings on a 20-acre site in Dallas’ Upper Tollway submarket. Developed in 1999 the property was extensively renovated in 2012 by the seller. Collectively, the buildings were 79 percent occupied at closing. A portion of the loan proceeds will be used for targeted upgrades to the building’s exteriors as well as funding tenant improvements and leasing costs to stabilize the asset.
This is Mesa West’s second financing with CapRidge. In December 2012, Mesa West funded a $16.6 million loan for CapRidge’s acquisition of a 136,000 square-foot office building in Austin, TX.
“CapRidge is a Texas-based owner with a track record of success in executing similar business plans on transitional office properties throughout the state. With strong in-place cash flow and minimal near-term rollover, CapRidge plans to stabilize the property by leveraging off of the strength of the upper Tollway market and the improving economy of the Dallas/Fort Worth Metroplex,” said Mesa West’s Jason Bressler who originated the financing.
The upper Tollway submarket has seen recent growth due to shifting demographics as the market moves north to take advantage of a strong highway system, a large inventory of housing and superior school systems, according to Bressler. Seen as a gateway to Dallas and Plano, the Upper Tollway is one of the healthiest office markets in the DFW Metroplex with strong positive net absorption in in each of the past three years.
The financing was brokered by Andy Scott and Jim Curtin in the Dallas office of HFF, LP.
In a separate financing, Mesa West Capital provided Brookwood Financial Partners LLC, with $28.8 million in first mortgage financing to fund the acquisition and renovation of Heritage Square, a 359,758 square-foot office complex in Dallas, TX.
When developed between 1978 and 1980 by Trammell Crow Co., the 10- and 11-story glass curtain wall buildings comprising Heritage Square were the first high rises along the Tollway north of the LBJ, which currently is undergoing one of the most comprehensive transportation improvement programs in the United States.
“Heritage Square is well positioned to capitalize on the improving Galleria submarket which will continue to tighten as the LBJ Freeway construction project nears completion,”
The property was 56 percent occupied at time of closing.
“We will be investing over $6 million in targeted capital improvements in Heritage Square, including upgrading the landscaping and renovating the entrances, lobbies, common areas, bathrooms, café and conference and fitness centers,” added Thomas W. Brown, Brookwood’s Director of Acquisitions. “Consistent with our ongoing value-add strategy, we are acquiring this property at a deep discount to replacement cost, and, because of our low cost basis, can afford to make these significant upgrades while executing leases at competitive market rates and offering attractive tenant improvement packages.”
Heritage Square is a well-located property surrounded by numerous amenities. The Upper and Lower Tollway submarkets, which comprise the Far North Dallas market, have been two of the strongest performing submarkets in Dallas over the last 24 months. According to CB Richard Ellis, since peaking at 19.5% in 2009, the Far North submarket vacancy has declined over 23% to its current level of 14.9%. In the past five years alone, the market has experienced nearly 2.5 million square feet of positive net absorption.
Cushman & Wakefield represented the seller, Addison, TX-based Silver Tree Partners in the transaction. Charles Foschini, Christian Lee and Chris Apone in CBRE’s Miami office arranged the debt financing for the buyer.