A North Dallas office building whose tenant roster has dipped precipitously will hit the market now that its owner has thrown in the towel on funding future losses on the property.
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Houston-based Tanglewood Property Group had been “covering shortfalls” at the 10-story Preston Plaza at 17950 Preston Road, according to Morningstar Credit data. But TPG is no longer interested in taking losses at the property, and a receiver appointed in February has hired a broker to market the 259K SF property for sale, according to Morningstar.
The property was 91% occupied when TPG acquired the building in 2017. But as of September 2023, when the property defaulted on mortgage payments and K-Star Asset Management became the special servicer, that had fallen below 65%. The building was financed by a $27.7M CMBS loan originated by Deutsche Bank and made through Wells Fargo Bank, the Dallas Business Journal reported, noting the July 15 loan balance stood at $25.8M.
Preston Plaza was last appraised at $41.8M in 2017, the DBJ reported.
Built in 1986, the building’s largest tenant is Slater Mastil. The international law firm expanded its lease to 27K SF in 2016. Goldman Sachs affiliate The Ayco Co. leases about 26K SF, while smaller spaces are held by Risk Transfer Partners, CIM Commercial Trust and Texas Health Surgery Center.
But several of those leases expire this year or in 2025 and are expected to fall off the rent roll, according to special servicer notes.
Dallas was the second-most-vacant office market in the nation in Q1 among large metros, with Houston coming in at No. 1 and Austin ranking No. 3, according to Moody's Analytics. The issue worsened in the second quarter, which saw vacancy tick up 30 basis points to 26.6% quarter-over-quarter, according to a JLL report.
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