08/15/2012

Dallas Listings Continue BofA’s Selling Spree

Continuing its wave of dispositions, Bank of America is seeking to sell and fully lease back two suburban Dallas office complexes with a combined value of about $200 million.

The 554,000-square-foot Hallmark 1&2, in Addison, Texas, is being pitched to core investors. It could attract bids of about $110 million, or $200/sf. BofA is also offering its 499,000-sf campus in Richardson. That property, which has a value-added component, is worth about $90 million.

The complexes are being marketed separately, but BofA would consider joint bids. At the estimated values, the capitalization rate would be 7% on the Addison complex and an unspecified higher level on the Richardson campus. CBRE and BofA’s in-house brokerage arm are sharing the listings.

In an effort to raise capital, BofA has sold four office properties in Boston, Charlotte and New York this year for a combined $1.3 billion. It has two other properties listed in Chicago and New York that could bring in another $770 million.

BofA plans to sign 10-year leases on both of the Texas properties. According to marketing materials, major business lines of the bank use the buildings, making them of “critical importance.” However, BofA would have the option of downsizing some of its space at the Richardson campus during the lease term of the lease. So the marketing campaign is noting that a buyer would have the potential to re-lease any resulting vacant space at higher rates.

For Hallmark 1&2, BofA’s rent would be $14/sf on a triple-net basis, with $0.50/sf annual increases. The complex is one of the few high-quality office properties along the Dallas North Tollway in the Far North Dallas submarket to hit the block in recent years. The submarket’s 36.9 million sf of office space is 84.2% occupied, exceeding the 79.2% overall average for Dallas.

The Hallmark complex is on a 22-acre site at 16001 North Dallas Parkway. Hallmark 1 was built in 1977 and renovated in 1995. Hallmark 2 was completed in 1997. BofA has invested $2.2 million in capital improvements since 2009, and another $1.2 million of upgrades are underway. A five-story garage and surface parking provide 2,038 spaces.

The Richardson campus has three five-story buildings. The bank intends to lease the space for $13/sf, with $0.50/sf annual rent bumps. The property is in the Richardson/Plano submarket, which has 19.6 million sf of office space that is 76.6% occupied, up dramatically from 71.4% a year ago.

The Richardson buildings are at 2375 and 2380 North Glenville Drive in Galatyn Park Urban Village, a development that includes multi-family housing, stores, restaurants, a Renaissance Hotel, a performing arts center and a light-rail station.

The offering includes 1,600 parking spaces in a five-story garage and a surface lot. The campus also has access to 588 spaces in an adjacent garage via an easement.

BofA has invested $830,000 in the Richardson campus since last year. Another $190,000 in improvements are underway.

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