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Dallas Business Journal - December 6, 2004
From the December 3, 2004 print edition

Ed Bass land sold to USAA
Daniel C. Bartel
Staff Writer

A land investment group led by Fort Worth businessman Ed Bass has sold its largest stake in Railhead Industrial Park in North Fort Worth to USAA Real Estate Co. in San Antonio in a deal estimated at $20 million, real estate insiders say.

The investment group sold approximately 183 acres at the 630-acre park for future development of rail-served distribution and warehouse buildings, a USAA official said.

A subsidiary of San Antonio-based insurance company USAA, USAA Real Estate scouts nationwide for opportunities to develop and market commercial properties, said Sharon Ballenger, a spokeswoman for USAA. The company manages about 30 million square feet of office, retail and industrial property. It owns several buildings in the Metroplex, including a 750,000-square-foot Kraft Foods/AmeriCold distribution plant in North Haslet.

"Dallas-Fort Worth has been on our radar screen for some time," Ballenger said.
USAA officials expect to build about 1 million square feet of industrial space at Railhead, but have no plans to build in the near future.

It's the second land sale this year for the Bass-led investment group, known as Railhead Industrial Park Investors L.P. -- as well as its largest. The first transaction occurred in April 2004 when Duke Realty Corp. in Dallas bought 47 acres from the investment group for about $5 million. Duke is in the process of building a 700,000-square-foot distribution plant for Del Monte Foods at Railhead.

Before that, the investment group sold 28 acres to SunTrust Equity Fund in December 2003 for an estimated $3 million based on previous sales, county officials said.

The group first purchased 272 acres at the park in March 2003 for slightly more than $14 million, according to county officials.

Trey Fricke with NAI/Stoneleigh Huff Brous McDowell in Dallas represented USAA in the deal. William Boecker, president of Sundance Square Development Inc. and a managing partner in the investment partnership, helped broker the deal on the land side. Other partners in the investment group are Martin Bowen of Fort Worth's Fine Line Inc., an Ed Bass holding company.

Strategic move
The move to purchase a portion of Railhead and sell off tracts was a bold yet strategic move from a speculative standpoint, said Rick Hughes, senior director at Cushman & Wakefield of Texas Inc. in Addison.

It takes a lot of cash and local savvy to make big land transactions pay off, Hughes said. But big deals played well often mean big returns. Railhead sits at the intersection of two major railways -- the Union Pacific and Burlington Northern Santa Fe -- an amenity that, alone, is enough to drive tenants to that submarket, he said.
"There really is a shortage of good business parks in the Metroplex like Railhead that are ready and willing to go," he said.

Pat Cornell, developer and co-owner of Railhead, said he wasn't prepared to make any comment on the sale or the particulars of the land deal. Cornell acquired the park in 1995 from a pension fund of E-Systems -- original developer of the park -- a company that was later bought by aerospace and defense contractor, Raytheon Co. (NYSE: RTN).

After nearly a decade, the $250 million park has opened three million square feet of industrial space that's 100% occupied, according to the Texas A&M Real Estate Center Web site.

Companies located at the plant include Mattel Inc., Albertson's, AmeriCold and Saddle Creek Corp.
As a recognized name, USAA adds more credibility to the sustained economic growth of North Fort Worth and overall economic development throughout Fort Worth, Boecker said.

USAA Real Estate operates more than $3 billion of assets under management and provides acquisition, built-to-suit and development services for corporate and institutional investors.

The group's parent company, USAA, based in San Antonio, is a financial services company for military personnel. It manages or owns assets of more than $74 billion and has a work force of 21,000 employees. Annual gross sales for the company 2003 were $10.5 billion, according to Hoovers.com, a business information Web site.