By Marlize van Romburgh Friday, January 21st, 2011

Dick Fausset is partying in Texas like it’s 1999.

The California real estate investor and his Ventura-based firm, Fausset Neely, recently sold a 104,500-square-foot shopping center in Amarillo, Texas, for $4.4 million — twice as much as they paid for the property in 1998. The sale follows a year of scooping up more than 300,000 square feet of office space in a market Fausset said is reminiscent of the investment climate in the 1990s.

“Before the market crash, I’d been thinking, ‘Oh God, I’m going to have to retire,’ ” Fausset said by phone from Amarillo, where he maintains a second residence. “And now I’m having fun again and playing around in Texas.”

Since 1992, his company has raised more than $70 million in capital and acquired more than 3 million square feet of commercial real estate. It’s sold about 2.2   million square feet for more than $140 million, many of those properties purchased during markets lulls in the ’90s and sold for hefty returns several years later.

But for the firm’s acquisition side, there was a 10-year waiting period in between, when prices got “screwy,” Fausset said.

Then the Great Recession came and the markets tanked. Fausset packed his bags, strapped on his spurs and strode back to the Lone Star State, where his firm has bought three office properties over the past year.

In December 2009, Fausset Neely purchased Northwest One, a 126,800-square-foot office building in Houston, for $5.3 million, at a 50 percent discount to the seller’s outstanding loan. The property was the firm’s first buy in almost 10 years.

In January 2010, it snagged Sherman Commons, two vacant office buildings near Richardson totaling 73,100 square feet, for $1.7 million. The firm spent about $460,000 on improvements and construction.

And in June 2010, Fausset Neely bought a couple of two-story office buildings totaling 98,600 square feet in Irving for $3.4   million. Fausset Neely spent more than $1 million renovating the buildings.
Commercial vacancy rates are high in Texas — Amarillo’s has topped 17 percent in some submarkets — but the state remains a safe haven for business, Fausset said, with its low unemployment rate. “[In Amarillo] it’s 5.3 percent. And they’re complaining about that,” Fausset said.

“The Texans, they’re so aggressive about job growth, and they’re still facilitating for development,” he said.

His firm began developing a 166-acre office park in Amarillo called Point West in the early 2000s. The campus has since grown to include major tenants such as Blue Cross Blue Shield, a hospital and several medical office buildings.

Fausset said the contrast between California and Texas was sharp: “When building that business campus in Amarillo, we got it approved in three to four months, including annexation,” he said. “If that project were in Ventura, it would have taken at least three years.”

The Texas market has proven to be a Wild West with plenty of opportunities — and risks — for a real estate investor who isn’t afraid to get his hands dirty. “We buy when it’s down and when it’s ugly. And then we fix up the buildings, spend some money on them and work to lease up the properties,” Fausset said. “When the market starts to come back, we sell early.”

Courthouse update

On Jan. 14, the State Public Works Board approved the Metropolitan Transit District property on Calle Real as an alternate site for a proposed $152 million criminal courthouse in Santa Barbara.
The California Judicial Branch previously submitted the downtown Hayward’s property at 1025 Santa Barbara St. and gained board approval for that site in December, paving the way for purchase negotiations. The downtown property remains the court’s preferred site, a spokeswoman said.

Escrow is expected to close in September, with construction beginning in January 2014 and wrapping up by December 2015.

DEAL OF THE WEEK

It’s official: Clothing retailer H&M has signed a lease on the vacant spot at 829 State St. in Santa Barbara, formerly occupied by Barnes & Noble. H&M penned a 10-year lease on the 15,262-square-foot spot and will open its doors this summer. Steve Leider and Clarice Clarke of Lee & Associates Central Coast represented the landlord, Rometto Co.