Case Study

Dakota Center

Fargo, ND

OVERVIEW

Dakota Center is a six-story, 119,000 s.f. office building in Downtown Fargo, North Dakota. The building is located in the heart of the Downtown area surrounded by numerous walkable amenities and restored properties.

OPPORTUNITY

Presidio Property Trust acquired the property in 2011. At the time of acquisition, the property was nearly fully leased with 82% of the property leased to a major national bank under a lease expiring in December, 2012 – just 19 months following acquisition. However, despite leasing most of the building, the bank actually occupied only a small portion and had subleased other portions to multiple tenants. It was known at the time that the bank would not renew their lease. However, after discussions with the subtenants, Presidio Property Trust was confident that many of the subtenants would sign new direct leases if the property was renovated.

Due to the significant upcoming rollover, Presidio Property Trust was able to acquire the property at an attractive price of $9.6 million, which represented a high cap rate of 14%. The property was acquired with a $5.7 million bridge loan.

Following acquisition, Presidio Property Trust invested $2.9 million renovating the common areas and parking lot, and constructing tenant improvements. Leases were signed with 5 former subtenants, including – somewhat surprisingly – the bank, which ended up leasing a full floor.

CHALLENGE AND OUTCOME

In 2014, the property was appraised at $14.8 million and refinanced with a new $11.1 million loan.

As of 2017, the property is 100% leased with several credit tenants. The property is currently valued in excess of $16 million.

In summary, Presidio Property Trust invested a total of $12.5 million in the property and refinanced out proceeds of $11.1 million. As of 2017, the property generates NOI of approximately $1.3 million.

67%

VALUE INCREASE FROM ACQUISITION TO 2016

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