Dallas office tower on block

Real Estate Alert, April 14, 2004

A REIT is seeking $85 million for a Dallas-area office tower.

The 412,000-square-foot Centura Tower 1, in Farmers Branch, is 97% occupied, with most tenants under lease for five to 15 years. At the expected sales price of $206/sf, the buyer's initial annual yield would be 8.25%.

Transcontinental Realty Investors acquired the building in June 2002 from another Dallas REIT, American Realty Investors, for $50 million. May Trust owns 80% of the stock in each company. The sale was conducted to remove a high-coupon $43.7 million mortgage on the property from American Realty's books.

Transcontinental is willing to provide $55 million of seller financing. The property is being marketed by a property management affiliate, Regis Realty 1.

Rents in the building range up to $28.53/sf. Tenants include Cantor Fitzgerald, Charles Schwab, Marcus & Millichap, Remington Hotel and Publicis/Bloom. A parking garage holds 1,500 cars.

The 15-story building, at 14185 North Dallas Parkway, was constructed in 1999 by area developer MJS Realty for $52.5 million. It is the first of a planned four-building complex, Centura Place, that will encompass 1.8 million sf of office space, plus a hotel, apartment tower and retail buildings. The other three buildings have not yet been constructed.