In today's earnings call, Crescent president and COO Dennis H. Alberts also disclosed the REIT's intention to sell its stake in the 217-room Ritz-Carlton condo hotel in Dallas' Uptown. "I see us exiting that asset at some point in time. It will not be a long-term asset for us," he told shareholders and analysts. The 70-condo project, with 68 units already sold, will be completed in August, a new neighbor for the REIT's trophy Crescent. The expected gain is pushing $22 million. And it's a safe bet that the REIT's stake in the project's 96-unit second phase will go as well.
GlobeSt.com has confirmed that the Schenectady, NY-based Trimarchi Management is negotiating to buy 3.1 million sf of Crescent's 5.6-million-sf office portfolio in Dallas. If the would-be buyer follows his normal course, it could play out as joint venture with Fortis Property Group of New York City. The fiscal powerhouse already owns two CBD high rises and JPMorgan International Plaza in North Dallas.
Crescent's in-hand contracts and its development pipeline shore up a plan to complete the transition this year. Also set to sell this quarter are the 418,338-sf 301 Congress St. in Downtown Austin and the resort hotel portfolio, which is passing to a joint venture led by Chicago-based Walton Street Capital Inc. for $620 million, including a one-off office building at 701 Brazos St. in Austin that shares the city block with a hotel asset. In terms of order, the office sales are expected to close first and then the hotel portfolio.
Crescent vice chairman and CEO John C. Goff says the residential and resort portfolio already has piqued interest from quality buyers although books are still being finalized. Crescent is selling its stake in a partnership with renowned developer Harry Frampton, which has developments under way in top-draw markets like Beaver Creek in Avon, CO and Lake Tahoe, CA. Whether Frampton will hold or fold when a buyer steps to the forefront, remains to be seen--and is his decision to make, according to Goff.
On the development side, Crescent is planning to add to the pipeline in Houston, Las Vegas and Irvine, CA. The 584,000-sf 6 Houston Center in the CBD will break ground in early 2008 and deliver in second quarter 2010. But, Goff says, the team's also eyeing additional office building projects on its extra Houston Center land and Greenway Plaza. In Las Vegas, ground will break in early 2008 on a 173,210-sf office building at 3893 Howard Hughes Pkwy., with delivery planned for second-quarter 2009. In the coming months, doors swing open on a 91%-preleased 239,000-sf office building at 3883 Howard Hughes Pkwy. And in Orange County, the REIT's pushing toward completion on a 267,000-sf office project at 2211 Michelson Dr., a $107-million project that's only 34% preleased.
"We are well on our way to becoming a focused office REIT," Goff said during the call. "Overall, we remain very confident that we have unlocked the right strategy to maximize shareholders' value. Our hope and plan is to have all this completed in 2007." The REIT has suspended guidance as it works through the disposition and repositioning.
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