Gramercy Center Office Building :

Total square feet: 256,357 SF (North and South)

18451 North Dallas Parkway
18583 North Dallas Parkway

PROPERTY DESCRIPTION
Panther provided approximately 56.64% of the total equity for the purchase of Gramercy Center which consisted of two office buildings totaling 256,357 square feet. The office complex is situated along the Dallas North Tollway. The asset enjoys a high parking ratio of 4.6:1000, which can be expanded to 6.0:1000, and offers excellent visibility with access to and from the Dallas North Tollway and President George Bush Turnpike/State Highway 190. Combined with close proximity to a wide range of amenities, including adjacent restaurants, retail, and a variety of residential options, Gramercy Center provides its tenants a convenient location to assist in attracting and retaining best-in-class employees. The property offers highly efficient floor plates with available suite sizes ranging from 5,000-30,000 sf, ideal for large corporate users.

ACQUISITION PROCESS
ATCAP was awarded this office portfolio on April 21, 2017. CapRidge Partners, an Austin based company, was the seller. CapRidge purchased the property in 2013 for $121/SF.  Unfortunately, three months into ownership Wingspan defaulted on their lease and vacated 130,000 total square feet. CapRidge is out of funds to release space i.e. tenant improvements and lease commissions.

The portfolio was 57% occupied when contract was signed and is 62% occupied today.

ATCAP had a “tenant in tow” (a signed lease) with a viable tenant for 50K SF to occupy November 1, 2018, at an average of $24.50/sf plus E. There was a 30-day termination clause which allows ATCAP (the landlord and our General Partner) to lease their space prior to August 2018, and terminate the lease, should there be an opportunity to lease their space sooner.

PROPERTY HISTORY
Occupancy peaked at 98.43% when the tenant in tow commenced their lease November 1st for 50,970 SF in North building for 5 years. ATCAP also signed AIS for a 7-year term which commenced July 1, 2018. Distributions commenced at a 10% coupon for 3rd quarter 2018.

The property was launched for sale at 98% leased with average in place rents of $23.89 per square foot. We awarded the deal but during the Purchase and Sale Agreement correspondence, the buyer went dark, and sale was dropped. There were no other legitimate offers at the time and the decision was made to continue operating the property, work to renew two large tenants, and pursue a capital event (i.e. sale or refinance).

ATCAP completed the refinancing of Gramercy which reduced interest expense, extended the maturity date 4 years and enabled a one-time distribution equivalent to 14.46% of invested capital (investor capital accounts were reduced by 3.16%).

Occupancy remained steady through 4Q 2019 and ended year at 95.40%. Distributions in 2019 were at a 14% coupon rate. In 2020, the Global pandemic (COVID-19) began and dominated 2020 with CDC recommendations for quarantine and shutdown during the peak of outbreaks. This followed with travel ban, billions of dollars in federal funding to fight the disease’s spread, and government relief checks issued. Panther and ATCAP opted to suspend distributions during Covid. At this point investors have received distributions totaling 33% of original investment.

 FINAL OUTCOME
Post covid, occupancy continued to decline as companies implemented work from home platform or a hybrid version and the property ended at 64.5% occupied at the end of 2022. Unfortunately, the lender would not work with ATCAP in negotiating an extension as the loan expired in June 2023. The property’s loan was ultimately sold to a third-party and a deed-in-lieu of foreclosure was finalized in September, 2023.

Panther LP’s ultimately received 0.40x their original investment marking Panther’s first and only partial loss of limited partners original equity.