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Hidden Ridge Location Beneficial to Future Development

IRVING, TX—The campus is adjacent to a 110-acre site owned by Verizon that has recently received approval to incorporate transit-oriented development uses, potentially, a mixed-used project.

By Lisa Brown | lisabrown | | Updated on August 22, 2016
Sale leaseback The Hidden Ridge campus recently recorded a change of ownership and a leaseback.
IRVING, TX— Verizon and its predecessor company, GTE, have occupied the Verizon Hidden Ridge campus since its construction in 1991. The campus recently recorded a change of ownership and a leaseback valued at $344 million. However, Verizon will continue to occupy the regional headquarters facility, and this transaction has no impact on the company’s business operations there. The sale was effectuated through a transfer of the property to Mesirow Financial , along with a lease agreement for a new 20-year term which provided Verizon with $20 million worth of tenant improvements. In addition, the land was subdivided by Verizon with a portion being retained by Verizon for possible future development. The 1.15-million-square foot campus, which currently houses approximately 2,800 full-time employees and contractors, a number expected to increase to 3,500 by year end, was acquired by Mesirow Realty Sale-Leaseback Inc. The campus, a key to Verizon’s corporate presence in Texas, houses a full range of businesses within Verizon Communications, while serving as the south central market headquarters for Verizon Wireless. In addition, the campus is adjacent to a 110-acre site owned by Verizon that has recently received approval to incorporate transit-oriented development uses, which enables the potential development of a mixed-used office park served by a planned DART rail stop, just steps away from the Hidden Ridge campus. Cushman & Wakefield acted as financial advisor and exclusive agent for Verizon on the transaction, which represents one of the largest single tenant leasebacks ever completed in suburban Dallas. The Cushman & Wakefield team was led by its corporate finance and investment banking group in combination with the company’s New York brokerage team. Jim Jordan , a Cushman & Wakefield executive director in the firm’s corporate finance and investment banking group, tells GlobeSt.com: “Verizon/GTE developed the Hidden Ridge property in 1991 and entered into a long-term lease of the improvements with an investor. They retained the land and ground leased the parcel underlying the building to the investor. The development site across Hidden Ridge Drive was retained for future development. This structure gave them significant optionality with respect to a lease renewal or a new build-to-suit option for themselves across the street. By leveraging the power of their tenancy and credit, they were able to negotiate an attractive purchase price for the leased property, thereby freeing up the development site for third-party tenants. Extending the lease term with a new investor allowed them to assign the purchase agreement, sell the underlying land and monetize the property, while garnering  certain economic and accounting benefits. It also allowed them to consolidate certain employees into vacant space, providing additional savings.”  The transaction represents the second large Verizon sale-leaseback purchase by Mesirow in the past few years. Last year, Mesirow purchased a 1.4 million-square-foot Verizon operations center in Basking Ridge, NJ for $650.3 million. “This transaction allows us to deepen our commitment to the Texas market and consolidate employees at this world-class facility while supporting further development options in the Hidden Ridge area,” said Jim Tousignant , director of global real estate for Verizon. The Cushman & Wakefield investment banking team included Jordan, David Wenk, Robert Elms, Mark Todrys, Maureen Kelly, Anthony Pasqual and Ben Lushing . They worked in conjunction with Josh Kuriloff , Cushman & Wakefield executive vice chairman in the firm’s New York office brokerage group. Cushman & Wakefield maintains its relationship with Verizon through its global occupier services group. “We structured and executed a complex, multi-party transaction that created significant value for Verizon by optimizing financing terms for the purchaser through a carefully crafted, credit tenant lease,” said Jordan. “This structure successfully delivers current and long-term value for both Verizon and Mesirow.” The Verizon team was led by John M. Vazquez , senior vice president and head of global real estate, and included James Tousignant and DJ Decker , as well as internal Verizon counsel Steven Cohen . Stroock, Stroock and Lavan served as counsel for Verizon under the leadership of Mark Hurel . Mesirow Realty Sale-Leaseback Inc. was led by Garry Cohen and Douglas Barker with legal representation by Goldberg Kohn . Jordan continues to tell GlobeSt.com: “An additional 31 acre western parcel was subdivided and retained for additional development potential. In a sense, the resolution of the Verizon occupancy requirements at Hidden Ridge allowed the planning, design and marketing of the 110-acre development site. Clearly, Verizon’s presence adjacent to the site with a large employee base helps underpin the economics of the new development, particularly as it relates to hotel, retail and dining.” Mesirow Realty Sale-Leaseback Inc. is a division of Mesirow Financial, a diversified financial services firm headquartered in Chicago. “This transaction provides our company with immediate financial benefits and does so in a way that supports our continuing interests in the development of Las Colinas. The extension of our tenancy through a sale and restructured lease affirms the value we see of having located in such a dynamic area for so many years,” said Vazquez.  

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