Case Studies.Early Tenant Engagement: Heritage Commons IV and Heritage Commons X

Active tenant relationship management and the ability to partner with local developers secured a highly accretive build-to-suit opportunity

Heritage Commons IV – Fort Worth, TX

Product

Single-Tenant Office

Purchase Date

2015

Transaction Size

164,333 SF
  • Challenge: GRT acquired Heritage Commons IV, a three-story Class “A” office building, as part of a three-property portfolio acquisition in December 2015. At acquisition, Mercedes-Benz Financial Services USA (“Mercedes”) occupied 100% of the building for its financial services division headquarters pursuant to a lease with a WALT of 2.8 years. However, Mercedes’ densification and expansion requirements could not be met onsite, and it began seeking build-to-suit opportunities well prior to its September 2018 lease expiration
  • Resolution:
    • GRT entered into a JV agreement with Hillwood to construct a build-to-suit for Mercedes on a nearby parcel owned by Hillwood called Heritage Commons X. Mercedes signed a 123-month lease at Heritage Commons X, and upon completion of the building and corresponding lease commencement in July 2019, the JV sold the property
    • Prior to Mercedes’ lease expiration at Heritage Commons IV, GRT also launched an aggressive marketing campaign and successfully re-leased 100% of the asset to American Specialty Health on a new 12-year lease, which commenced just four months after Mercedes vacated the building
  • Benefits:
    • Sale of Heritage Commons X resulted in significant value realization; GRT achieved a profit of $5.5mm on an equity investment of $3.1mm
    • New lease at Heritage IV was put in place with minimal downtime while also securing a 9% higher rental rate than previously paid by Mercedes