Rockworth
Rockwall & Ft. Worth, TX
Net Rentable Area: 132,000 SF
Purchase Date: January 2005
Sale Date: May 2006
Description:
Rockworth consisted of two buildings: a single Tenant office building in Ft. Worth totaling 31,792 square feet and a 100,000 square foot multi-tenant office/warehouse building in Rockwall, TX, a suburb of Dallas. The Rockwall building was 75% occupied at the time of acquisition. The Ft. Worth building had a new 5 year lease with a credit tenant.
Strategy:
The original plan was to buy the buildings individually as they were not geographically similar. However, the single tenant nature of the Ft. Worth building made it difficult to finance. The Rockwall building had 2 credit tenants on long term leases. By combining the 2 buildings, it became a multi-tenant portfolio and allowed for more favorable financing. We also felt the vacancy at Rockwall could be leased up with some fresh capital.
Result:
By combining the properties, the lender gained more security on lease rollover. This allowed us to increase leverage and reduce the interest rate over what was originally offered. Within 6 months of purchase, one of the existing tenants in Rockwall expanded into the vacancy. This gave us a 100% leased portfolio with no expiration for 4.5 years and all credit tenants. We were able to sell after 16 months.