Feb 7

Caddo Holdings: Taking a chance on real estate

Nearly five years ago, the real estate market was in the tank — a bad time for real estate brokers Dustin Schilling and Justin Engler. But the two found an antidote in a late lunch at Al Biernat’s.

The two decided it was time to build a new real estate investment firm, solidifying the deal over a shot of tequila.

Today, Schilling, now-CEO of Caddo Holdings LLC, and his business partner Engler, along with President and COO Tim Slaughter, are running an active Dallas firm, which has bought and sold office and industrial buildings in some of North Texas’ most high-profile neighborhoods.

The firm, which was formed in August 2009, has had some early successes. Last year, Caddo Holdings sold Lakewood Towers in Lakewood and Crosstex Court in Uptown. Caddo recently purchased Preston Plaza, a 260,000-square-foot office tower in North Dallas.

One of Schilling’s keys to boosting office tenancy and rental rates is having a management arm, Caddo Real Estate Services, oversee the company’s nearly 1 million square feet of office and industrial space in North Texas.

Are you buying or selling in Dallas? We’re actively doing both. We don’t have any properties on the market today, but we’ve been actively buying. When we reach stabilization, we often can sell. Right now, we’re very much in buying mode.

Why sell in Uptown right now? On 2501 Cedar Springs, we hit our business plan and accomplished what we set out to do. The timing was right on selling it. We bought that building as part of a portfolio in 2011, and it really had two tenants, one being the majority, which was Crosstex Energy Services. At the time, they had a couple of years of lease term remaining on their office lease. We bought it with a business plan being A) re-lease should Crosstex decide to leave, or B) renew Crosstex and stabilize the building. In the end, Crosstex ended up expanding and becoming the primary tenant of the building. Once that happened, there wasn’t a whole lot else for us to do on the property.

What properties do you like to buy? We have not bought total train wrecks, but buildings that have been under-operating that could use various tweaks to push occupancy and push rental rates.

Is it difficult to find those properties right now? It’s a highly competitive market right now. I think it’s becoming increasingly difficult to find the right deals when weighing risk and return.

Where is the company looking for future investment? We are looking at specific markets in Dallas-Fort Worth, Austin, Houston and to a lesser degree San Antonio. We look at both office and industrial buildings. The key driver is location. We have a retail-like mentality. We want to be around very walkable demographics. We like to identify properties, which are often not on the market.

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