Dunhill Shells Out $102M for 589,201-SF Center

STAFFORD, TX-Making its second buy in the Houston area, Dallas-based Dunhill Partners has paid $102 million to Kimco Income REIT for the 589,201-sf Fountains on the Lake. The developer has picked up enough land with the 74.35-acre buy to add 50,050 sf to the 10-building power center.

According to Jason Piering, vice president of CB Richard Ellis’ Dallas capital markets debt & equity financing, Dunhill is in the market for trophy, credit-anchored retail assets like Fountains on the Lake at 11222 Fountain Lake Dr.

Piering worked with CBRE/Melody’s managing director Randy Fleisher to structure $100 million of debt and joint venture equity financing for the buyer. Piering says Dunhill buys assets that make sense for its strategic directives rather than target any one geographical region. The New Hyde, NY-based Kimco and Dunhill have partnered in the past on deals.

Piering tells GlobeSt.com that Dunhill plans to start work soon on developing pad sites for the extra space. He says the new retail space will be geared toward restaurants and small shops.

Also, Piering says that, with the work Dunhill is putting into the center, combined with the new long-term debt, it’s likely to be in the portfolio for a long time to come. “Typically, this is a long-term holder. But if someone comes in with a good deal and the return is as good, if not greater, than what they already have, then they’ll sell it,” he says.

Built in 1996, Fountains on the Lake is 98.6% leased with tenants including Bed, Bath and Beyond and Borders, Wolf Camera, Saks Fifth Avenue Outlet, Office Max, Sports Authority, Hobby Lobby and Rack Room Shoes. Piering says the lease roll is staggered, with big-box tenants having long-term leases on the one hand and the strip retail tenants having three-to-five year terms on the other.

“There is a little roll during the next couple of years, but Dunhill has such a good track record as a landlord, they’ll renew,” Piering predicts. “If not, this will be easy enough to backfill. The property is doing better than the surrounding market right now.”