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Ownership Behind Dallas Skyscraper Lands Equity Infusion for Upgrades

Loan is Expected to Help Bolster Occupancy at 1.5 Million-SF Comerica Bank Tower
September 11, 2018
The ownership behind Comerica Bank Tower in downtown Dallas has paid off an existing CMBS loan totaling about $143.5 million with a new loan that will help revitalize the 1980s-vintage building and expand an adjacent office garage.

Dallas-based TriGate Capital and M-M Properties of Houston borrowed an undisclosed sum from New York-based Annaly Commercial Real Estate Group. At the time of the loan, the ownership group had $143.5 million left on an original CMBS loan from 2007 totaling about $180 million.

The refinancing makes way for Comerica Bank Tower, the second-tallest tower in Dallas, to undergo upgrades and compete for additional tenants. The 1.5 million-square-foot office tower at 1717 Main St. is one of the last skyscrapers in the city's central business district to undergo a big renovation.

In recent years, landlords have injected millions in capital upgrading Trammell Crow Center, Fountain Place, Ross Tower, Bank of America Plaza and Chase Tower in hopes of attracting new would-be tenants. And now, Comerica Bank Tower is joining the renovation race.

"We are upgrading elevator landings, corridors and restrooms throughout the building," Jason Obenhaus, TriGate Capital's senior vice president, told CoStar News. "We are exploring other upgrades to the property."

The building renovations are part of the partnership's business plan to increase occupancy amid an evolving central business district, Obenhaus noted.

"Our job is to provide modern tenant spaces while showcasing the building's iconic architecture and classic high-rise features," he said, adding the revamp of The Statler Hilton, the new Pacific Plaza Park and the addition of the Royal Blue Grocery has attracted new tenants to the neighborhood.

The skyscraper's namesake tenant, Comerica Inc., recently extended the bank's lease totaling 227,441 square feet to September 2023, according to CoStar data.

Another big office tenant in the building, ORIX USA, has been shopping the market for would-be office space.

Currently, ORIX has more than 78,000 square feet of office space on a lease that expires in October 2020.

Ken Moczulski, chief executive officer of M-M Properties, said the building has received "very good" responses from the market in the last few years.

"The timing was right to refinance the debt to facilitate the future leasing," Moczulski added.

HFF helped TriGate Capital and M-M Properties secure the new loan.

The proceeds of the loan were used to repay the prior CMBS loan and provide additional capital to fund leasing efforts, expand the Elm Street parking garage and other would-be improvements.

Obenhaus declined to disclose any additional renovations slated for the 60-story office tower, which is about 75 percent occupied.

The infusion of capital could help Comerica Bank Tower compete with its peer buildings in downtown Dallas, said David Kahn, the Dallas-Fort Worth market analyst for CoStar.

"Owners have to renovate or do something new with their buildings or they'll fall behind," Kahn said. "Comerica Bank Tower is one of the few buildings in downtown Dallas that hasn't been completely redone."

Kahn said landlords are doing this to compete for new buildings coming to the Dallas market and against other renovated buildings.

"Owners know they have to raise their game to retain and attract new tenants," he added.

Candace Carlisle, Dallas-Fort Worth Reporter  CoStar Group   
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