SkyWalker Property Partners has sold a fully leased medical office property in central Arlington to a 1031 exchange buyer, marking the first sale for its fund, When Opportunity Knocks LLC. The all-cash sale went full circle within 40 days.
The medical office building, totaling 13,382 square feet, is a USMD multi-specialty clinic at 809 W. Randol Mill Rd., which is adjacent to the 369-bed Texas Health Arlington Memorial Hospital. SkyWalker Property's fund has only owned the property 18 months, buying it with a triple net, single-tenant lease in play and a building in need of renovation.
"The risk was the tenant's lease was set to expire. We renegotiated, extended and eventually signed a 10-year lease," said Clint Holland, acquisitions director for Arlington, Texas-based SkyWalker Property Partners and the fund's manager.
During the fund's short hold, the single-story building underwent extensive renovations and conversion to a full-service multi-disciplinary clinic from a gynecological practice. USMD gutted the structure and reconfigured the interior, investing more than $1 million into the build-out, with When Opportunity Knocks contributing toward tenant improvements.
A 10-year lease and newly renovated building set the stage to exit the investment. Four rock-solid offers rolled in within seven to 10 days after the marketing campaign began. Medical office specialists Jeff Matulis and Toby Scrivner of the Stan Johnson Co. had listed the property for the seller of record, Doctor Mill Good LLC.
Winning the deed is a local family from Cleburne, which used 1031 exchange funds to close the all-cash deal. Joel St. John of JLL represented the buyer of record, Randol Mill LLC.
"From our brokers' standpoint, we could not have asked for a better execution," Holland said. "We definitely exceeded our expectations."
The USMD clinic was developed in 1976 on a 1.08-acre tract in an area that has evolved into a large-scale medical district right in the heart of the city and the closest emergency services for
the University of Texas at Arlington.
The sale is one of three medical deals that SkyWalker Property Partners has secured for the city of Arlington in recent weeks. One transaction is pending.
The other property in the stack is a two-story office building at 801 E. Border St., which was sold by a SkyWalker single-purpose entity, Bardin Square Investors LLC, to a medical office buyer, one of five prospects bidding on the project. The seller had made significant improvements to the 11,424-square foot structure before putting it on the market for sale or lease.
"It's a well-designed building," said Renee Efimoff, senior vice president of SCM Real Estate Services, an affiliate of the local investment firm, and the sellers' broker for the two of the three transactions.
The two-story project's first floor is covered parking, with a street-level lobby, two sets of stairs and an elevator. Improvements included replacing the elevator, fixing the roof, enhancing both stairwells and adding a mural. The second level was gutted and the office space taken back to shell condition.
"These three sales are indicative of the current trend to keep or locate medical services close to patients' homes. Arlington stands to benefit as medical providers branch out from Dallas and Fort Worth, which bodes well for investors like SkyWalker Property," Efimoff said.