Full Circle

When the first two buildings at Hampton Oaks Business Park opened on Tampa's east side in 1987, R. Dallas Whitaker was early in his commercial real estate career as a leasing representative there. Now he has a office there again in a new capacity as part-owner.

Whitaker is principal of Foundation Realty Advisors LLC, a commercial property investment/leasing/management firm started late last year with two former colleagues from Colonial Properties Trust. Hampton Oaks marks its first acquisition, partnering with a private investor from Alabama and paying $18.4 million for the 259,000-square-foot collection of six single-story office and light-industrial buildings, the last of which was built in 1999.

FRA, which also involves Tom Hallowell and Rick Lessley in Atlanta, is looking for commercial property opportunities throughout the Southeast — not strictly those in distress or held by banks, but those in which owners are willing to liquidate even in the current low-price climate.

The trio actually had an opportunity last summer to buy Hampton Oaks, but deemed the $22-million price too high. Waiting a few more months allowed FRA a decent discount, as well as pricing at 60% of the park's replacement cost.

“These properties are tough to find and they're hitting the market in all forms,” says Whitaker, who worked for Birmingham, Ala.-based CPT for nearly two decades before leaving in 2007 to start an independent brokerage in Tampa, Greystone Equity LLC. The low quantity of quality properties could change in months to come, he says, especially if the Federal Deposit Insurance Corp. forces banks to shed assets bogging down their books.

Whitaker says he and his fellow FRA principals are taking a lot of what they learned at CPT, a publicly held real estate investment trust, and applying it to their much-smaller private equity shop. Their initial goal is to deal in well-located commercial properties that are in solid condition — in terms of both structural soundness and rent rolls — and buy them at a low-cost basis for high net-worth investors.

“Being in a public company environment forced us to work together and find ways to operate more efficiently than we might have in the private world,” Whitaker says. The disciplined approach to maintaining service and quality levels, along with greater accountability on pricing assumptions, have translated well to FRA even though the private firm doesn't face the same regulatory scrutiny as CPT, he says.

The timing to buy Hampton Oaks from Chicago-based RREEF America LLC worked in favor of FRA and its outside partner on the deal, Propst Properties of Huntsville, Ala. A greater number of non-traditional buyers — that is, those that aren't REITs, such as CPT or institutional players like RREEF -- are in the market for the kinds of properties that might have been ignored when the economy was booming just a few years ago, says Mike Davis, executive director with Cushman & Wakefield in Tampa who marketed Hampton Oaks.

Ironically, it was selling at the top of the market that led Whitaker, Hallowell and Lessley to leave CPT. The company, which primarily owns shopping centers and apartment complexes, sold the majority of its office portfolio to DRA Advisors LLC in 2007 and basically eliminated their jobs.

“We have experienced the full commercial investment cycle, and we did it together,” says Whitaker, who was previously a senior vice president and market officer for CPT in Birmingham and Tampa. He added that they also have experience in all aspects of owning and running properties, from leasing, marketing and management to acquisition, disposition and repositioning.

Fortunately for FRA, Hampton Oaks won't need much of the latter. The park has 15 tenants, such as law and insurance firms, and a large amount of space is occupied by telecommunications equipment. Apart from a few landscaping and signage changes, the park appears to be doing well at 95% occupancy.

Of course, tenants are being sought for the remaining vacancy, including Whitaker's currently spacious office. But, having been a leasing rep there, he knows the drill: “As soon as we can lease this space,” he says, “I'll just move somewhere else.”
— Carl Cronan