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AT&T Global HQ Building, Lease in Downtown Dallas Being Pitched to Investors

Telecom Giant's Longterm Lease, BBB+ S&P Credit Rating Could Help Lure International Investor Interest
May 3, 2018
AT&T could soon have a new landlord at the company's global headquarters tower in downtown Dallas, with CBRE brokers expected to put the telecom giant's 37-story, 965,800-square-foot tower -- and, more importantly, a long-term lease by a highly rated credit tenant -- on the market in the near future.

AT&T's lease, which runs through August 2030, was structured as a sale-leaseback deal with an affiliate of New York-based Icahn Enterprises LP, led by Wall Street investor and billionaire Carl Icahn.

IEP Dallas Inc., the affiliated ownership entity, has hired a team of CBRE brokers to begin marketing the office tower, called One AT&T Plaza, at 208 S. Akard St., and the long-term lease with AT&T. Although the office tower, also called Whitacre Tower, last sold for $60.1 million in 2008, local real estate brokers say the long-term lease is the most valuable part of this deal, worth roughly $278 million.

North Texas has seen several big sale-leaseback deals in recent years, including State Farm Insurance's $825 million sale-leaseback of its regional hub in Richardson, and the $344 million sale of Verizon's campus in Irving to Chicago-based Mesirow Financial.

J.C. Penney Company Inc. also took the opportunity to significantly shrink its corporate footprint in a sale-leaseback deal to Dallas developer Sam Ware, who has been redeveloping the property into a multi-tenant campus.

Real estate sources say this deal would likely be similar with the creditworthiness of AT&T attracting international and domestic investor interest from institutional investors and high net worth individuals. According to S&P Global Ratings, the telecom giant was given a grade of BBB+. Fitch Ratings has AT&T clocking a credit rating of A-.

The 35-year-old office tower, originally built for Southwestern Bell, serves as a key part of AT&T's downtown Dallas campus, and is currently undergoing a $100 million redevelopment to create an "urban-tech" campus designed to appeal to young professionals and clients alike. As part of the project, the two million-square-foot, multi-building campus is also being renamed Discovery District.

Upon completion, Discovery District will have room to house up to 7,000 employees, offering outdoor spaces for gathering and Wi-Fi access throughout the campus. The latest construction timeline of the project was not immediately available Thursday.

AT&T's long-term lease has contractual escalations of 2 percent annually. As of October 2018, the lease, which was recently renewed, has estimated revenue of $278 million remaining over the term of the deal.

AT&T and CBRE were not immediately available to comment Thursday.

Candace Carlisle, Dallas-Fort Worth Reporter  CoStar Group   
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