DALLAS-The Bascom Group LLC has acquired The Davis Building, a 20-story, mixed-use property situated in downtown’s Main Street District. The property, which includes 183 loft-style apartment units, 52,235 feet of retail space and a 600-space parking garage, was purchased out of receivership for an undisclosed amount.
Built in 1926 as an office building, The Davis Building was converted in 2003 into a mixed-use project. Hamilton Properties spent about $35 million to transform the building, according to local experts. The Dallas-based investor was unable to refinance or restructure its existing $32.6-million CMBS loan, and the property was put into receivership with Omnium Management Co.
The property was marketed by Will Balthrope and Ryan Epstein of the Balthrope Group of Institutional Property Advisors, a Marcus & Millichap Co.
“What peaked our interest initially was the fact that The Davis Building was a class A property in receivership – those are few and far between and when we find them, we want to make a strong push for them,” says Jeffrey Fuller, senior vice president of acquisitions for Irvine, CA-based Bascom. He led the acquisition, along with Han Jang and Paul Miskowicz, also with Bascom.
Fuller tells GlobeS.com that Bascom worked with J. E. Robert Cos. to restructure and assume the existing loan. Unlike many other loan assumptions, the special servicer approved the loan quickly; however, court approval for a receivership sale took much longer.
While the majority of Bascom’s 8,480-unit multifamily portfolio in Texas is comprised of class B properties, Fuller explains that the firm recently has focused its acquisition efforts on the class A segment. “The Davis Building fit our current investment model,” he adds.
However, Fuller also admits that The Davis Building is a new type of property for Bascom. “It’s very unique for the portfolio because it’s a mixed-use high-rise in an urban location,” he points out. “We’ve always wanted to buy something like this, but never have before. This building is one-of-a-kind opportunity.”
Fuller says Bascom has a lot of confidence in downtown Dallas’ revitalization. “The submarket is improving greatly, and we think there is a lot of upside in the downtown market as a whole,” he says, adding that The Davis Building offers Bascom operational upside through reduced expenses and rental rate upside.
The Davis Building’s multifamily units were 95% leased at closing. However, there retail portion of the project is about 50% vacant, Fuller says. Onsite property management has been assigned to Entrada Partners, and parking management services have been assigned to LAZ Parking.
The Davis Building is one of three acquisitions Bascom has made this year. It acquired two properties in Denver just last week. “We’re looking at 2011 as a very strong acquisitions year,” Fuller says, adding that the firm is looking to invest $300 million.
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