Richardson’s CityLine office tower complex, a 2.2 million-square-foot, mixed-use property off U.S. 75, was sold last week by lead investor Mirae Asset Global Investments and partnering investor Transwestern Investment Group. The buyer, first reported by the Dallas Morning News and confirmed to D CEO by Newmark Vice Chairman Gary Carr, was former Phoenix Suns owner Robert Sarver.
According to Carr, who was part of the Newmark team that represented the seller in the transaction, the firm received eight offers on the property from North American and off-shore investors. Exact terms of the deal were not disclosed, but Carr said, “A big driver for [Sarver] was the discount to replacement, buying it at around 40 percent replacement cost. And the return on costs was attractive compared to where it would have been 12 to 18 months ago—due to the cost of debt moving up about 150 basis points.”
The property, which has an average remaining lease term of 13.5 years, last changed owners in 2016 when its anchor tenant, State Farm, sold the property for $800 million. According to Carr, the property sold at a discount compared to the value it held seven years ago but, “The sale was fair market value based on today’s dynamic,” he said. “Everything is selling at higher cap rates than they were 12 months ago—everything has moved because the cost of debt has moved. But the property cash-flowed very well over the last five-year period.”
Along with its high-profile location at the President George Bush Turnpike, the campus also features 120,000 square feet of retail space and a 42,000-square-foot medical office building. The four-tower office component, home to about 10,000 State Farm employees, is the centerpiece of the $1.6 billion development. The area also features shops, apartments, townhomes, and a hotel.
Alongside Carr, Newmark Vice Chairmen Chris Murphy and Robert Hill, in cooperation with Kevin Shannon, Ken White, and Alex Foshay represented the seller. Newmark Vice Chairman David Milestone and Directors Josh Francis and Henry Cassiday provided debt capital markets advisory in executing the sale.
The transaction marks the largest office sale by consideration and square footage in North America so far this year.
Sarver, who bought the property through a Phoenix-based multi-family office tied to his name, sold the Phoenix Suns and Phoenix Mercury in 2022 for an estimated $4 billion. The move came after the NBA suspended him for a year following allegations that he had racist, misogynistic, and hostile incidents over his 20-year ownership tenure.
“[Sarver] has plenty of time with the lease duration to figure out his plans for the property,” Carr said. “He’s making the bet that 13 to 14 years from now, with that location, this property is going to be attractive to somebody.”
Looking ahead in the market, Carr told D CEO, “New construction is going to be almost nonexistent. But population growth and relocation to the area is going to continue. We’re fortunate to be in Dallas, so the inbound growth will continue. It may slow down here for a short period, but it’ll pick back up and over time that backfilling will occur.
“Overall, this sale was good for the market,” Carr added. “I love to see new capital coming into the market. Hopefully Sarver will do more in the area, but this sale is a validation on investing in North Texas.”
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