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REA
March 07, 2018  

Angelo Gordon Lists Upgraded Dallas Offices

An Angelo, Gordon & Co. partnership is pitching two recently repositioned Dallas office properties as a leasing play.

Bids are expected to reach about $175 million for 505,000 square feet at two buildings in the Uptown/Turtle Creek submarket. The Class-A office space is 80% leased, and the pitch is that a buyer could boost occupancy to achieve a core profile.

The offering encompasses the 393,000-sf office condominium at a mixed-use building called The Centrum, plus a 112,000-sf office building across the street. Eastdil Secured is representing New York-based Angelo Gordon and its local partner, Quadrant Investment Properties. The duo prefers to sell the properties as a package, but would consider individual bids.

A $25 million renovation, completed last year, upgraded the exteriors and lobbies and redesigned office space to appeal to technology and “creative” tenants. Amenities were added, including a rooftop deck, a tenant lounge and a 6,000-sf fitness center.

Office leases that pre-date the renovation carry below-market rents, so the overall in-place average is 25% below the market asking rent of $32/sf. A buyer could boost its return by raising rents as those leases roll over and leasing vacant space. Meanwhile, tech-oriented tenants have started moving in, including Capital Factory, an Austin-based provider of “incubator” space for start-ups.

Uptown/Turtle Creek’s 9.4 million sf of Class-A office space was 88.7% leased at yearend, according to a CBRE report. The area has emerged as the city’s hot “live-work-play” neighborhood.

The Centrum, at 3102 Oak Lawn Avenue, has five restaurants in some 40,000 sf of street-level space that’s included in the offering. The 19-story building has separately owned residential condos on the top eight floors. The 13-story Hall Street at Centrum is at 3625 North Hall Street.

Another recently renovated property nearby, also with leasing upside, traded last month for slightly more than the $347/sf estimated value of the Angelo Gordon offering. Ohio State Teachers paid about $355/sf, or just under $49 million, for the 137,000-sf building at 3131 Turtle Creek Boulevard. Eastdil advised the seller, Dallas-based Cardinal Capital.

The Angelo Gordon partnership paid an unidentified seller $53.7 million for the office and retail space at The Centrum in late 2014. The duo acquired Hall Street at Centrum, at 3625 North Hall Street, for $20 million in 2016, according to Real Capital Analytics.