Valwood
Carrollton, TX
Net Rentable Area: 353,000 SF
Purchase Date: October 2004
Sale Date: April 2007
Description:
Valwood was a multi-tenant portfolio consisting of 4 separate Class A office/warehouse/flex buildings. The 353,000 square feet were 94% leased at the time of purchase.
Strategy:
Although this was not a "value add" play and the price per square foot was high, we were attracted to the long term leases, the quality of the assets, and the credit of the tenants. Additionally, all the leases had contractual rent increases. The intention was to hold these properties long-term. A 10 year conduit note was arranged at 5.50% fixed, interest-only for 5 years, allowing for a cash-on-cash return in excess of 12% annually.
Result:
A drop in cap rates and a rise in interest rates added significant value to the portfolio. The ownership decided to take advantage of the market conditions and sold after 30 months.