Hoque Global and PegasusAblon to Buy Bank of America Plaza (original) (raw)
Bank of America Plaza and four surrounding blocks will soon be sold to Dallas developers and investors Mike Hoque of Hoque Global and Mike Ablon of PegasusAblon.
The seller is Chicago-based Metropolis Holdings, which paid about $300 million for iconic tower in 1998. At 72 stories, it’s the tallest in Dallas and one of the tallest in the western U.S.
Metropolis, which manages assets for German investors, held onto the trophy asset for more than 25 years through wild real estate cycles, making gradual improvements such as framing the signature exterior lines with LED bulbs and adding a tenant lounge and other amenities.
Even after namesake tenant Bank of America announced plans last year to move to a new 30-story tower in Uptown, Metropolis, operating from a position of financial strength, planned to stay the course with its 1.85 million-square-foot icon. In the end, though, the firm decided it was time to step aside and let new ownership take Bank of America Plaza into the future.
Hoque and Ablon, who have put the property under contract, are planning a $350 million redevelopment that will add a 300-room luxury hotel to the tower and enliven the streetscape of the four blocks of land that come with the purchase. (Most of that land is currently used for parking garages or lots.)
“It has been the pride and joy of our company to own the city’s tallest building with the most prominent silhouette lighting up the Dallas skyline,” Tom Dempsey, managing director and head of asset management for Metropolis, told D CEO. “Several investment and development groups approached ownership to buy the asset in recent years.
Dempsey said the company selected the Dallas-based buyers “because of their dedication to downtown Dallas and the vision … to transform the property and the neighborhood. “We undertook a lengthy process of vetting and getting to know Hoque Global, and we are excited for the future of Bank of America Plaza,” he says.
The players aren’t revealing the acquisition price but tag the redevelopment at 350million.Thepropertyat501MainSt.iscurrentlyvaluedatabout350 million. The property at 501 Main St. is currently valued at about 350million.Thepropertyat501MainSt.iscurrentlyvaluedatabout143 million by the Dallas Central Appraisal District.
How the Deal Came Together
Hoque and Ablon are known as two of Dallas’s most visionary developers. In 2015, Ablon was selected as the recipient of D CEO’s inaugural Pioneer Award in recognition of his placemaking achievements, including transforming the Dallas Design District.
Hoque has had a profound impact on the downtown market as the restaurateur behind Wicked Butcher, Wild Salsa, Chop House Burger, Dallas Chop House, and the soon-to-be-reopened Dallas Fish Market (next spring).
He has expanded beyond restaurants to become one of the largest landowners in urban Dallas, with holdings between downtown and Cedars. Plans are underway for projects like Newpark Dallas, an education and technology hub near City Hall, and SoGood, an innovation district and residential and commercial development near the Dallas Farmers Market.
So, what do Hoque and Ablon plan to do with their new prize? The answer: go big.
Hoque had been interested in Bank of America Plaza for nearly a dozen years. He first tried to open a restaurant in the building. Next, he aligned with seasoned hospitality exec Dave Johnson of Horizon Capital to pursue a hotel in the tower.
“We started talking about doing the hotel,” Hoque says, “and as we were talking about the hotel piece, the ownership group came back last year and said, ‘Mike, do you want to buy the whole thing?’ I said, ‘OK. Let me do some homework.’”
“It took us about a year to negotiate because [Metropolis] wanted to talk to my partners—all the capital,” Hoque says. “After verifying everything, we went under contract a few months ago. I knew I had a great hotel partner, but I needed an office partner, so I thought about who would be the best one. I talked to a several different potential partners, but went with Mike [Ablon], with whom I had worked on other successful projects in downtown Dallas.”
The two Mikes share a fierce passion for Dallas and are like-minded about creating spaces that have an impact. The deal was restructured so that Ablon would become an acquisition partner. “We didn’t just want to buy the building to buy the building,” Hoque says. “We wanted to do something that will change the area—it needs it. It’s what links everything. We wanted to do something catalytic.”
A Focus on the Street
Like Hoque, Ablon’s development philosophy revolves around adding to the fabric of neighborhoods as much as it does solid financial returns. He has architecture and engineering degrees from The University of Texas at Austin and a master’s degree from Harvard. He studied in Paris and worked under Robert Venturi, who is known for changing how people think about the built environment.
He and Hoque are determined to avoid mistakes others have made when adding new uses, such as hotel or residential, to existing office towers. “In downtown Dallas and its current iteration, people typically redo the lobby and make them multifaceted,” Ablon says. “But apartment and office tenants don’t really cohabitate, and you don’t want to slam them together. It doesn’t work, and it doesn’t do anything to frame the street.
“We’re not going to have what is called a ‘jump lobby,’” he continues. “Instead, this will be almost like an airport, where people arrive and people depart. The hotel lobby will be magnificent. It must be dynamic, so you’ll want to come down a level.”
The hotel lobby will be separate and lower than the office lobby. A new glass box is planned to house the lobby as well as a ballroom and meeting space. Hoefer Welker, which has served as architect for other Hoque projects, has been tapped to lead design of both the hotel and office redevelopment. (See renderings in the gallery above.)
The real showstopper of the hotel is a six-inch-deep reflecting pool and deck being added to the 69th floor. It will be bounded by 8-foot-tall glass walls for safety and protection from the wind.
Unlike most residential add-ons, bringing in a hotel will add robust amenities for office tenants, Ablon says. Plans call for an upper-level restaurant, three restaurants on the street level, and shops.
“If you think about great urban cities, it’s the street that’s magical,” Ablon says. “The buildings make a beautiful backdrop. The notion here isn’t to have a great monument; it’s ‘What will make me want to be on the street?’
“There’s a $3 billion convention center coming two blocks over, and we’re going to be at the front door,” he continues. “But if you can spur street life, then people want to be there. And if people want to be there, then great things happen, and you have a self-fulfilling prophecy.”
A Critical Link
Hoque and Johnson of McKinney-based Horizon Capital Partners met about five years ago. Johnson got his start at Trammell Crow Co., and today, most of his investors are people he met through that first gig. Before launching his own company four years ago, he was the founder, chairman, and CEO of Aimbridge Hospitality, a hotel management company he grew to about 1,500 properties. Harlan Crow was an early investor.
Johnson and Hoque hit it off and began doing deals together. He was immediately enamored with the opportunity to work on a hotel at Bank of America Plaza. “I knew Mike had done his homework and wanted to do it right,” Johnson says. “We didn’t want to build too many keys—right now, we’re looking at about 300 keys on 10 to 12 floors.”
Negotiations with the hotel flag should be finalized within a month, Hoque and Johnson say. They won’t give any hints about who it is, allowing only that it will be a high-end luxury brand.
“You always look for how you can differentiate yourself,” Johnson says. “This project has a great location. There aren’t too many high-end hotels in that immediate vicinity. When you do a new hotel, a block is like a mile. We will capture business just from that, as well as the proximity to the convention center. The brand we choose will be a differentiator in and of itself. And there’s nothing in Dallas that can offer the views this asset has.
“I don’t think the average Dallas resident truly understands what the impact of the new convention center will be,” Johnson adds. “It’s going to transform the city. I’m so bullish on Dallas. I’ve been here for 30 years, and I’ve been in real estate for 30 years, and I’ve never seen a city going through a renaissance like Dallas; it’s crazy.”
A New Financial District
On the office front, Hoque has already zeroed in on a key prospective tenant: the new Texas Stock Exchange. TXSE Group Inc. announced in June its plans to launch the exchange and base it in Dallas. It has completed its initial capital raise and will seek registration with the U.S. Securities and Exchange Commission.
Hoque believes it is an ideal tenant for his vision: to create a new financial district anchored by Bank of America Plaza.
Jennifer Scripps, president and CEO of Downtown Dallas Inc., says the project is poised to be a lynchpin that will bring the neighborhood into a new era. “We love to see iconic properties get a new infusion of life to bring them into the next phase,” she says. “There is so much happening around the building, but next door is somewhat of a dead zone. This will fill in that space.”
The city’s central business district has benefited from having a diversified economy, Scripps says, with financial services, insurance, compliance, and other professional services seeing a lot of growth. “[Improvements at a] building of this size will help keep a robust and diversified economy downtown,” she says.
The city of Dallas was built by local business leaders. In recent decades, national and international real estate investors moved in. But now, Ablon points out, the bulk of downtown projects are once again being driven by local investors and developers—Lucy Billingsley, Craig Hall, Jack Matthews, Ray Washburne, and him and Hoque.
“We’re all local with different ideas, and that’s fantastic,” Ablon says. “If everyone does what they find interesting, Dallas starts having a much more unique, authentic scene.
“On this one, you could say that what we’re doing is a bit of a moonshot,” he says. “But if we do this properly, if we can use the building to frame the street, then more people will want to be here. We must think this way to pull downtown to what it might become.”
Key Players
The new owners and other team members involved in Bank of America Plaza’s redevelopment:
Hoque Global
Owner. Led by investor, developer, and founder Mike Hoque, the Dallas-based company also owns a full portfolio of restaurants (under DRG Concepts), Adolphus Tower, Newpark Dallas, and SoGood, as well as investments in technology, logistics, and more.
PegasusAblon
Owner. In the past 15 years, the company has completed more than $1.5 billion in investment transactions. It specializes in placemaking projects, such as the Dallas Design District. It’s led by founder Mike Ablon, who has engineering and architecture degrees from UT-Austin and a master’s from Harvard University.
Horizon Capital Partners
Hospitality equity partner and adviser. Based in McKinney, the privately held real estate investment firm was founded by co-managing partners Dave Johnson, former chairman and CEO of Aimbridge Hospitality, and Mark Smith, who oversees business operations.
Hoefer Welker
Architect. Led by CEO and founding partner Mitch Hoefer and president and partner Rob Welker, the Kansas City-based design firm has worked with Hoque on prior projects. It has offices in Dallas, Fort Worth, and Jacksonville.
Author
Christine Perez
Christine is the editor of D CEO magazine and its online platforms. She’s a national award-winning business journalist who has…