SkyWalker Property Partners Buys Class A Office Property to Jump-Start New Fund's Portfolio
ARLINGTON, Texas – In an all-cash transaction, SkyWalker Property Partners has acquired a 72,518-sf class A office building as the first property for its Opportunity Knocks Fund in preparation for the launch of a major capital raise in June.
"We've been tracking this building for three years. It's in a key area of Arlington," says Clint Holland, acquisitions director for the locally based investment group.
The 40%-leased office building at 701 Highlander Blvd. is located on the city's South Side, close to Arlington Highlands, Parks Mall, USMD at Arlington and Baylor Orthopedic & Spine Hospital. The 4.6-acre property includes a T-Mobile cell tower.
"We consider 701 Highlander to be the best value-add deal we'll find in this part of the investment cycle," Holland explains. "It's a great repositioning opportunity, but there is a lot of deferred maintenance."
At least $400,000 will be invested into addressing the deferred maintenance and upgrading a 30-year-old structure. Roughly $150,000 is earmarked to remediate waterproofing issues with the roof, windows and granite-clad skin panels. The lobby will be getting new lighting, finishes and furniture. Upgrades also are planned for elevator cabs and common areas. The exterior plan calls for a new monument sign and landscaping improvements. Work is expected to get underway within 30 days.
The five-story office building was sold by 26 tenants-in-common investors, TIC-Highlander Building LLC. The TIC was formed in 2004 when it was bought by then Idaho-based DBSI Inc., which declared bankruptcy in 2008 and started liquidating assets in the wake of fraud convictions for four top executives.
"The challenging nature of the TIC structure made it difficult for the ownership to invest new capital into building improvements and leasing," Holland says. "It was just a matter of time before they were going to have to sell it."
The buyer of record, This Land is Highland, was represented by Gary Walker, managing principal of Coldwell Banker Commercial Alliance DFW, and Colt Powers of NAI Robert Lynn. Paul Getty of Sperry Van Ness/First Guardian Group of San Jose, Calif., acted on behalf of the sellers.
"Paul and his team did a really good job of getting this done. It was tough. Every document had to have 26 signatures," Holland explains.
Renee Efimoff, vice president of Coldwell Banker Commercial Alliance DFW, will lease the property for the new owner. Currently, there are seven tenants, the largest of which is Ursus Holdings in 11,000 sf. Despite the property's proximity to hospitals, there are only two medical-related tenants – Arlington Medical Imaging and Casper Sport Chiropractic & Spine, both sharing the first floor with Compass Bank. The office building features granite floors and upscale wood finishes. It has floor plates totaling 14,500 sf and a parking ratio of 4:1000.
"Class A office buildings in Arlington's southern corridor are limited. The ability to accommodate a full-floor tenant presents a good opportunity for a corporate user needing a large block of contiguous space," Efimoff says. "It also provides access to a large labor force living in communities on this side of the metroplex."
SkyWalker Property Partners set up the fund to acquire class A or B properties, preferably multi-tenant in primary, secondary or tertiary markets. It has a seven-year life span. The goal is to raise $15 million to $20 million, starting in June, to acquire office, flex, warehouse, retail and condo properties with value-add potential in Texas and surrounding states.
"This is the seed property for the Opportunity Knocks Fund," Holland says. "We have another project under contract."