REAL ESTATE REPORT The Ten Best Deals In Dallas

1. DALLAS



Choosing the ten best real estate deals in Dallas was no simple task. For after listening to the collective genius of many of Dallas’s real estate gurus-guys like Wayne Swearingen and Jerry Fults, real estate appraiser Harvey Cornwell, and developers from Lincoln Property Company to Kenneth Hughes-then being tugged this way and that by various brokers and analysts, there were far too many good deals to easily whittle down to a mere ten-pack. Dallas, it seems-as a whole-is the bargain. And you know why. You’ve heard all about our diverse economy, our world-class airport, our comparatively low taxes.. . Now don’t get nervous if your property was singled out in the final cut. These pieces of real estate are not dead meat that’s been swooped upon by vultures who speak in foreign tongues. What’s identified here is value-great properties that can be had at amazing prices.

2. THE PENNEY’S DEAL



When Sid Uberman came to town this year saying he was going to lease a million square feet in the next ninety days for an “undisclosed tenant,” quite a few brokers stood up and took notice. That tenant, of course, was JCPenney, and all of Dallas is very happy Penney’s came to town. In particular, the folks at Sunbelt Savings, whose asset managers on the Aberdeen building on the Dallas Parkway, Transwestern Property Company, hustled to lease the entire 325,000 square feet of that debt-troubled property to Penney’s. The folks at Lincoln Property Company were also pleased to lease a big chunk-600,000 square feet-of Lincoln Centre. And the balance of the million feet was leased at the Park Central project, where Penney’s already had some offices. And Penney’s is pleased as well. As the story goes, it wouldn’t be inaccurate to say Penney’s got all of that space for well under $16 a foot.

3. BUCKINGHAM



This is a developer’s dream- a x ’hole town, 160 acres smack dab in the middle of Richardson that could probably be bought in the $90 million range-that’s about $12.50 per square foot. The town was originally blocked up for about $6 a foot in 1983 by C.W.. Kendall III, a broker with Creative Realty Group Inc. A joint venture headed by Dallas land developer Michael Bloch was the purchaser. Since that time, Bloch and partners have spent about $20 million on improvements for the town, upgrading the infrastructure and putting more lenient zoning in place-most importantly, Bloch succeeded in getting the property rezoned wet, making it an oasis in Richardson. Bloch would still probably like to be king of this town; however, this year Buckingham got a little complicated: Wen-Clay International, one of Bloch’s partners on the deal, was actually a JV partner with Vernon Savings on its interest. When Wen-Clay ran into financial problems, Vernon became Bloch’s partner. Then Vernon was taken down by the regulators, so Bloch’s partner effectively became the federal government, and Buckingham is just one in a long line of Vernon assets that the Federal Asset Disposition Association is analyzing. However, FADA is finalizing the business plan on Buckingham, which means it may soon be ready to be taken off of Bloch’s hands. Meanwhile, Bloch is in the middle of a $50 million lawsuit against Vernon, but for $90 million, he might be willing to drop the whole matter and unload this crown jewel to another development monarchy.

4. ONE McKINNEY PLAZA



This fourteen-story, two-year-old, substantially leased office building at McKinney and Hall streets was taken off the hands of its lender, Commodore Savings, for a trophy price of $35 million. It was purchased this summer by the Stone family of Cleveland, and though some may gasp at the high price, Commodore, which also financed the deal for the Stones, apparently provided very favorable loan terms. Swearingen’s Meg Morris and Barry Davidson were the brokers on the deal. Another motivation for the purchase-Morris Stone, the patriarch of the family, is apparently a trolley buff, and in addition to purchasing this building on the McKinney trolley route, he kicked in $200,000 to the McKinney Avenue Transit Authority. And that’s money well spent, because the trolley on McKinney is only going to add to the long-term worth of the property along that avenue.

5. THE SOUTHWESTERN BELL DEAL



It’s a great time to consider a build-to-suit facility-the cost of financing is competitive, the cost of land and construction is low compared with the past three to five years, and services are much more extensive as developers get more aggressive and accept lower cash-on-cash returns than in the past to generate fee income and keep their development teams intact. The “Your Name Here” building is really the only finance-able project in town these days. Tenants can get custom-made space for essentially less than they would pay to rent space built on spec or for another tenant. Southwestern Bell Telephone Company saw the logic in that argument. And Southland Financial Corporation is mighty glad they did. Southland is developing this $35 million training center in Las Colinas that will serve 11,000 employees of Southwestern Bell.



6. SOUTHLAND CENTER



A three-building downtown complex as well located as Southland Center doesn’t come on the market that often. Though part of the office-hotel complex is thirty years old, developer Southland Financial Corporation pumped $50 million in renovations into Southland Center just four years ago. This summer, Oxford Development Group of Toronto contracted to buy the landmark buildings from debt-ridden Southland Financial. The deal looks good for both buyer and seller-Southland is happy to take a loss on the sale to reduce the cash drain of the 500-room Sheraton Dallas hotel; and Oxford reportedly picked up the office property for $70 a foot.



7. CITYPLACE



The Southland Corporation didn’t plan on having to lease the East Tower of Cityplace, nor did it plan on having to sell off so quickly the choice parcels of property it’s been blocking up for the last seven or eight years. But the stock market works in mysterious ways, and the founding family of Southland (under the guise of The Thompson Company and JT Acquisition Corporation) didn’t plan on having to take Southland private in a leveraged buyout to avoid takeover. That takes lots of cash-to the tune of about $150 million to be squeezed out of the Cityplace planned development during the next several years. The change of plans in the corporate structure prompted the change at Cityplace, which was to serve as fancy new headquarters for Southland. Now, it seems, Southland will be getting smaller, reducing overhead, and using less space in the new building. So we have a large block of class A, high-rise office space with primo views and top-quality finishes coming on the market that nobody counted on. You’d better believe the people at Cushman & Wakefield are gonna be making some deals on that space. As far as the property goes, it’s prime stuff given the zoning that Cityplace has already secured and the infrastructure Cityplace is spending big bucks on, including making a landscaped boulevard out of Haskell and Blackburn complete with granite curbs.



8. PRESTON CENTER EAST



This 8.4-acre specialty shopping center at the southeast corner of Northwest Highway and Preston Road will be undergoing a facelift soon under the guidance of Kenneth H. Hughes Interests as a consultant for the new owner. This was quite a honey of a deal for the Rutledge-Willingham partnership, which purchased the thirty-five-year lease-hold on the property in January of 1986 for $5,750,000, then sold its control of the property this summer to Boston-based Al-drich, Estman and Waltch for $37,130,000. Doesn’t that sound like fun?



9. LAKE LARRY



When you stop laughing, consider this: the hole at the corner of Cole and Lemmon Avenue, where Larry Lassiter planned his chic high-rise tennis club, is one of the few remaining O-2-zoned office properties in Oak Lawn. Granted, the city of Dallas may try to add $1 million to the purchase price because of the trouble it’s gone to to keep the hole safe; granted, the back taxes are phenomenal. But considering the new height-restricted zoning package that the Dallas City Council passed this summer, land affected by the Oak Lawn Plan-which is exempt from the new zoning changes-is going to be selling at a premium. Now, if you could get it for less than $60 a foot, and if you could get Chris Evert to endorse your project.. .



10. ALLIED BANK TOWER AT FOUNTAIN PLACE



If you called ManufacturersHanover Trust Company ofNew York tomorrow, they’dtell you that Fountain Place isnot for sale. However, everyone knows it is-at a price.Even people who like to saythey hate reflective glass officebuildings are beginning to seethe charm in Allied Bank Tower. This project, conceived byCriswell Development Company, is the landmark that willcarry Dallas through the turn ofthe century. The property wastaken back by Manny Hanny at$204 million and one popularrumor has a foreign group making an unsuccessful run at Allied for $175 million. But foranother $15 to $20 million, wehear, it could be had. That’s expensive given that Allied continues to lease up at rates wellbelow original projections, butwhen you consider this building’s location and landmarkstatus, it’s a steal. In four tofive years, our gurus think classA office rates in downtownDallas will skyrocket. The wayfinancing has been shut offaround here, in about five yearswe’ll hit another shortage of office space and rents will gothrough the ceiling.