Parallel Discusses Strategy Behind Purchase of Landmark Dallas Towers

By Scott Baltic, Contributing Editor

The purchase by Parallel Capital Partners of the 850,000-square-foot, two-building Urban Towers project in Irving, Texas, announced late Tuesday, marked the company’s re-entry into the Dallas–Fort Worth market.

And Commercial Property Executive had the opportunity to find out from Parallel Capital Partners managing partner Jim Ingebritsen why the private CRE investment and operating company, based in San Diego, gradually left the Metroplex and why it has returned.

To recap the deal itself, the property, which fronts State Highway 114 in Las Colinas, a business district and master-planned community, consists of two Class A high-rise offices (a 22-story North Tower, built in 1982, and 17-story East Tower, completed two years later); two parking structures totaling 2,736 spaces; and plans for a third office tower and parking garage.

The buyer was a partnership between Parallel Capital Partners and Angelo, Gordon & Co., and the seller was CB Richard Ellis Strategic Partners U.S., which had owned the towers since 2006. The transaction’s dollar amount was not disclosed.

Urban Towers, which is LEED-Silver certified, is 88 percent occupied, anchored by Celanese Corp. Other major tenants are Verizon, HealthSmart and Union Standard Insurance Group. Amenities include a fitness center, deli and coffee shop, medical clinic, and conference facilities.

Kennedy Hicks and Michael McDonald from Eastdil Secured represented CBRE, and Parallel represented itself. Parallel has brought in Cushman & Wakefield of Texas Inc. to handle property management and leasing.

“We typically buy assets that are in need of repositioning, rebranding or aggressive leasing,” Ingebritsen told CPE.

Parallel’s original holdings in Dallas were part of a $300 million portfolio acquisition in 1998 from SinarMas, an Indonesian firm, he said. Those assets were:

• The Melrose Hotel, which was sold in 1999 after a full renovation;
• Twin Towers (445,000 square feet) and The Atrium at Colin Ridge (234,000 square feet), which were sold in 2004 after having been renovated and having the occupancy on both increased to 90 percent; and
• 1301 Fannin in Houston (786,000 square feet), which was sold in 2007 “when we felt the asset was well positioned for sale,” Ingebritsen added.

Having left Dallas–Fort Worth, Parallel nonetheless carefully monitored the market and recently started seeing good risk-adjusted returns, relative to its other target markets, Ingebritsen said.

Eastdil Secured originally marketed Urban Towers, along with buildings in Atlanta and Chicago, as a five-building, 2.9-million-square-foot portfolio. Once the seller decided to break up the portfolio, Parallel targeted Urban Towers, according to Ingebritsen.

“We will continue to look closely at the Dallas-area market,” he added, “and are currently looking at multi-tenant office, industrial and life science properties throughout the Southwestern U.S. and Hawaii, preferably assets in excess of $50 million.”

And that potential third building at Urban Towers? In line with the original development plan, Ingebritsen said, “When market conditions dictate, a new 317,000-square-foot office tower and 1,400-stall parking garage can be added to the site.”

“Given the existing infrastructure and amenity base, along with our zero-dollar allocation to the expansion site, the costs to complete such as expansion will be significantly less than the competition, allowing for a competitive advantage throughout the next cycle,” Ingebritsen concluded.