Magazine article Journal of Property Management

A Texas Sized Bargain

Magazine article Journal of Property Management

A Texas Sized Bargain

Article excerpt

Buy low. That strategy was adopted by Randy Alexander when purchasing an 18-story turn-of-the-century abandoned utility company building in the heart of Fort Worth's financial district.

As it turned out, Alexander paid nothing for the 150,000-square-foot office building. "We had a sympathetic owner who was willing to become an investor," says Alexander, president of The Alexander Co. in Madison, Wis.

But considering that $10 million was needed to convert the building into rental apartments, making the numbers work still wasn't easy.

Reconstruction costs were financed with a conventional first-mortgage loan of $4.7 million. The remainder was equity supported by historic tax credits, a common vehicle used by developers to help fund the con version of notable office buildings. These federal income-tax credits are equal to 20 percent of the cost of rehabilitating historic buildings and provide deductions on a dollar-for-dollar basis. The tax credits can be applied only to rental buildings.

For this property, the City of Fort Worth also contributed 10 years of tax abatements for the project. …

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