DALLAS-Sunwest Real Estate Group has acquired two office buildings totaling 177,000 square feet from Midland Loan Services, a CMBS special servicer.

Prior to being taken back by Midland Loan Services, the class B- properties were owned by a tenant-in-common investor group syndicated by Rainier Capital Management of Dallas. The 1970s-era buildings are located on Central Expressway near Walnut Hill Lane at 10300 North Central Expy. and 10260 North Central Expy.

“This was an all-cash deal and a quick close – 30 days from contract to closing,” says Marc Grossfeld, principal of Sunwest Real Estate Group. He declines to disclose the sale price, but notes that Sunwest paid less than the properties’ tax appraisal, which was $6.7 million combined, according to the Dallas County Appraisal District.

Sunwest partnered with Libitzky Property Cos. of Emeryville, CA, to make the acquisition. The two companies jointly own another asset on Central Expressway, the historic Meadows Building at 5646 Milton St.

“The Meadows Building is part of the reason we bought these buildings,” Grossfeld tells GlobeSt. “The new buildings complement Sunwest’s existing holdings along Central Expressway.”

Sunwest plans to re-brand the buildings as Meadow Central I & II. Currently, the assets are 55% occupied, and the firm plans to take over the leasing and management with hopes of stabilizing the buildings through an aggressive leasing strategy and an extensive capital improvement program, Grossfeld says.

The firm expects to invest roughly $1.5 million for tenant improvements and other capital expenditures including interior and exterior renovations. A large portion of the capex will be spent on speculative office suites for smaller tenants.

Sunwest plans to focus its leasing efforts on smaller tenants (10,000 square feet and smaller) whose business owners live in the North Dallas neighborhoods of Preston Hollow, Lake Highlands and Park Cities. Grossfeld points out that this “small tenant” leasing strategy has been successful at the Meadows Building, which was 73% occupied when purchased in 2003. Today, the building is 94% occupied.

Asking rates for 10300 North Central Expy. are $13 per square foot, full-service, while rates for 10260 North Central Expy. are $11 per square foot, full-service. “After improvements and stabilization, we think we’ll be able to push rents to $15 to $17 per square foot, full-service,” Grossfeld says.

The properties were brokered by Gary Carr, Eric Mackey and Jon Napper of CB Richard Ellis. Grossfeld and his father, Michael, represented Sunwest in the transaction.

“We hope to acquire similar assets in Dallas in the future,” Grossfeld says. “These buildings are some of the first we have seen in North Texas where the lender has come down to meet the buyer’s pricing. We hope to see more opportunities like this.”