Distressed Dallas Office Campus Changes Hands
In a joint venture with Enverra Real Estate Partners, Gulf Coast Western has purchased Parkway Office Center North and South, a two-building, 230,000-square-foot office campus in Dallas. Principal Financial, the asset’s former lender, sold its interest in the loan to the duo, foreclosing on the previous borrower. JLL represented the seller.
ORBIS Real Estate Fund I, an investment vehicle managed by APEX Pacific Partners Advisors, was the prior borrower, CommercialEdge data shows.
The oil and gas company Gulf Coast Western was the largest tenant at the property when the deal closed, occupying 14,000 square feet according to the Dallas Business Journal. Its tenancy dates back more than 12 years.
READ ALSO: CPE Asks: What Makes a Distressed Office Property a Good Investment?
The newly formed Enverra focuses on repositioning underperforming properties in high-potential growth markets, according to prepared remarks by Tommy Spinosa, the company’s managing partner.
Repositioning underperforming assets
The property came online in 1982 and previously underwent cosmetic renovations in 2012, CommercialEdge data shows. Rising nine stories, the buildings features floorplates ranging between 12,000 and 14,000 square feet, six elevators, controlled access and offer 826 car parking spaces.
The new landlords are planning an overhaul for the underperforming campus. GCW President & CEO Matt Fleeger said, in prepared remarks, that the refurbishment process will include improvements to the facade, landscaping, garage, lobbies, cafe and common areas.
Plans also call for several additions, such as a gym, lounge, conference room and golf simulator, as well as 38,000 square feet of build-to-suit office space, Fleeger added. The team expects completion by the summer of 2025, the Dallas Business Journal reports. Following the capital improvements, Parkway Office Center will cater to smaller companies wanting to lease an entire floor. The property was 45 percent leased when the deal finished, according to the same source.
Located at 14180 Dallas Parkway, the campus is less than 1 mile from Interstate 635 and roughly 12 miles north of downtown Dallas. Multiple retail facilities and quick-service restaurants can be found within 2 miles.
Dry powder in pursuit of distressed real estate
Although distress in the office sector has been long awaited and then apparent for some time now, its scale and pace remain a point of contention. MSCI Real Assets placed the office sector property distress at $38.2 billion in the first quarter, leading the way and accounting for 12.9 percent of total existing and potential distress across all major property categories.
As investors wait for prices to reset and further opportunities to materialize, global private equity and venture capital funds held a record-breaking $2.6 trillion in uncommitted capital as of July 10, according to S&P Global Market Intelligence and Preqin data. The investment vehicles added $49.4 billion to their reserves during the first half of 2024, nearly doubling the amassed capital during the entire year of 2023, which clocked in at $28 billion.
However, buyers are deploying some of the dry powder, purchasing distressed assets. In August, Menashe Properties paid $33 million for Montgomery Park, a 768,443-square-foot office property in Portland, Ore., after the owners defaulted on debt. The asset previously traded for $255 million in 2019.
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