Florida investors buy 50 Penn Place in OKC

In-Rel Properties Inc. paid $15.25 million for the combo office building and retail mall, with big plans to turn it around, in a deal handled by broker Amy Dunn of CB Richard Ellis-Oklahoma.

Published: April 2, 2011

The Oklahoman- Oklahoma City, OK
By Richard Mize- richardmize@opubco.com

Florida investors bought hybrid landmark 50 Penn Place for a price that tells the tale of the long-troubled combo office tower and retail mall: $15.25 million — a steep 40 percent less than the seller paid for it in 2004.

Florida investors buy 50 Penn Place in OKC

In-Rel Properties Inc., based in Lake Worth, Fla., plans to improve the property to get its office and retail space leased up, said Mukang Cho, chief executive officer. Amy Dunn, a broker with CB Richard Ellis-Oklahoma, handled the sale, which closed late Thursday.

The seller was Dallas-based Rainier Capital, which paid a then-eye-popping $25.7 million for it in 2004 in a tenant-in-common arrangement in which Rainier had a 10-percent stake.

50 Penn Place, 1900 Northwest Expressway, is a 16-story office building of 184,896 square feet with an attached three-story mall of 233,472 square feet and a two-story parking garage of 263,340 square feet, built in 1974.

Has seen better days

Despite an enviable location just off Interstate 44 across Northwest Expressway from Penn Square Mall, 50 Penn Place’s reputation as an exclusive place to work and shop has suffered for a decade or more.

Retail, especially, has suffered during the recession, although popular destinations such as Full Circle Bookstore and Belle Isle Brewery remain successful.

In-Rel, which has a portfolio of more than 5 million square feet of commercial property, bought 50 Penn Place with reviving it in mind, Cho said.

In-Rel is working with Oklahoma City architecture firm Glover Smith Bode Inc. to develop a renovation plan, said Ron Riley, In-Rel executive vice president.

“We should have final plans by mid-May, at which point we can provide greater detail on our specific plans for the building,” Riley said. “By working with a local architectural firm, we are confident we will enhance the appeal and value of this landmark asset in a way that will be well received by the community and the marketplace.”

‘Value and service’

Riley said that In-Rel’s marketing services manager, June Hurt, has been talking with potential tenants, emphasizing the company’s operating approach, “value and service to our tenants.”

“We are confident that the location of the building, coupled with our operating philosophy, will resonate firmly with existing and prospective tenants, as well as the brokerage community,” Riley said.

Tenants at 50 Penn Place said they were excited about the new owners and the changes they’ve promised.

Mike Madhoo, owner of Mystique Fragrances, had planned to direct his customers to his new location in Northpark Mall and close the 50 Penn Place location. But the new owners changed his mind.

“They put new life into me,” he said. “We’re at the bottom right now, so the only direction to go is up.”

In the 18 years he’s had the fragrance shop in 50 Penn Place, he’s seen owners come and go. But this time, he said, they took the time to meet him and listen to what he had to say.

Clothier Chris Khrais, owner of The Pinpoint Resource, said the new owners’ emphasis on retail is exciting.

They’re “going to bring the standards of the building a little bit higher, back to what it used to be,” Khrais said.

In-Rel ‘bought it right’

Rainier Capital’s acquisition of 50 Penn Place from MRO Properties in 2004 turned heads because of the $25.7-million price tag, said Ford Price, co-managing partner of Price Edwards & Co., Oklahoma City’s largest local commercial realty firm. But then, Price said, tenant-in-common investors were so numerous that prices were trending up everywhere. Those prices did not sustain the onset of the recession.

In-Rel “bought it right,” Price said, although 50 Penn Place will need some careful attention and capital infusion.

Cho said that’s exactly what In-Rel has in mind.

“Our investment thesis begins with the notion that the target property is a quality asset and that its underperformance can be turned around and sustained during our investment period,” Cho said. “It is with this thesis that we acquired 50 Penn Place.”

This is the first investment in Oklahoma for In-Rel, which also owns office buildings and shopping centers in Florida, Georgia, Alabama and Tennessee. In addition to its Florida headquarters, In-Rel, founded in 1985, has offices in Birmingham, Ala., and Memphis and Nashville, Tenn.

“We acquired 50 Penn Place with the view toward unearthing substantial value by leasing up the property and making substantial physical improvements. We have traditionally been long-term holders of real estate, owning and operating the assets for the cash flows,” Cho said.

City seen as a plus

In-Rel’s first interest was in 50 Penn Place, Cho said, but as it conducted due diligence, it came to appreciate Oklahoma City.

“We have traditionally been a ‘bottoms-up’ real estate investor, focusing on the fundamentals and prospects of the underlying asset as opposed to broader macroeconomic concerns,” he said. “As the company had grown over the years, we have complemented our ‘bottoms-up’ investment approach with ‘top-down’ analysis. We underwrote the 50 Penn Place opportunity at the asset level to start but became increasingly interested as we analyzed the Oklahoma City marketplace.

“We are excited about reintroducing 50 Penn Place to both our existing tenants and the community at large. We are poised to grow substantially in Oklahoma City and its surrounding region in the very near future and look forward to forging relationships on all fronts, from prospective tenants and brokers to vendors and other service providers.”

CONTRIBUTING: BUSINESS WRITER JENNIFER PALMER

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