University Federal Credit Union buys new corporate headquarters

Feb 8, 2012

In one of the area's larger office deals in recent years, Austin-based Aquila Commercial has brokered the $95 million sale of three Austin office buildings to two of its clients, including one building that will be the new headquarters for fast-growing University Federal Credit Union.

University Federal Credit Union plans to consolidate about 250 administrative workers from four locations into the newly purchased building, called 8303 MoPac. Sitting at MoPac Boulevard (Loop 1) and Steck Avenue, the 246,000-square-foot building was built in 1987 and is 94 percent leased.

Tony Budet, University Federal's president and CEO, said the purchase price was $42 million, or $170 a square foot. Budet said that is a "bargain price for a highly visible building of that quality and size on a heavily traveled corridor convenient to many of UFCU's core membership groups, including the University of Texas, our growing medical community and other major Austin employers."

"Given the current economic climate, we found this an exceptionally good time to invest in a facility to accommodate our cooperative's long-term growth needs," Budet said. With the building largely leased, "our cooperative will immediately benefit from resulting lease income."

The sale closed concurrent with the sale of two other buildings — Prominent Pointe I and II — at Capital of Texas Highway (Loop 360) and Spicewood Springs Road. DivcoWest Real Estate Investments, a San Francisco-based real estate investment and management firm, bought the two buildings with a combined 263,000 square feet for about $53 million.

The purchase is the fifth acquisition for DivcoWest's Fund III, an $871 million investment vehicle raised late last year.

The seller of all three buildings was Aspen Properties Inc., based in Austin and once a dominant suburban landlord in Central Texas.

Austin has been a favored market of Divco over the years and continues to attract its attention, said Stuart Shiff, CEO of DivcoWest.

"We've had good success investing in the Austin market over the years, and as an owner/operator with a strong reputation among technology tenants, Austin — arguably one of the premier tech-oriented markets in the country — is one of our natural targets for investment," he said.

With the purchase, DivcoWest now has more than 700,000 square feet in the A us tin market.

"Divco is a major player in the (San Francisco) Bay area," sa id Diana Holford, managing director of the Austin office of Jones Lang LaSalle, a global real estate services firm. "They understand technology companies and focus on technology markets. It is a great sign that they are here."

Aquila's Mike Murphy — who along with Sloan Spaeth represented University Federal Credit Union in its purchase — said 8303 MoPac is a great fit for the credit union.

"The building has enough vacancy to accommodate them, but just as importantly ... revenue generated from leases will complement UFCU's conservative appetite for risk," Murphy said.

With 11 existing financial centers and three more set to open this spring in the Austin area, University Federal is Austin's largest locally owned financial institution with more than 142,000 members in the Austin and Galveston areas.

The credit union has 425 employees, with non-administrative workers in branch offices in the Austin area and Galveston.

Most of the administrative employees who will make the move now work at 3305 Steck Ave., one block from the future headquarters building, Budet said.

"That's what's so ideal. It won't change the commute patterns for staff or members," Budet said.

The 250 workers will occupy about 100,000 square feet of the building in the 2013-2014 time frame, with the credit union leasing out the remaining space, Budet said.

Two of University Federal's current administrative centers to be consolidated — 3305 Steck Ave. and 8800 Shoal Creek Blvd. — are buildings that the credit union owns and will be sold, Budet said. However, the first-floor financial center at the Steck location will be leased back to the credit union and remain open to provide deposit, lending, drive-through and walk-up ATM services. Three other North Austin facilities — the credit union-owned building at Shoal Creek and two leased facilities — will eventually be sold or closed.

Budet said 8303 MoPac will help the credit union accommodate its growth during the next 10 to 15 years. Formed in 1936, the credit union today has nearly $1.5 billion in assets, up 15 percent from 2010, and its membership, at 142,000, is up 8.2 percent over 2010.

Budet declined to speculate on growth or employment projections.

As a not-for-profit company, the credit union, he said, prefers to "measure success by how well we serve our members, and the bottom line and growth take care of themselves."

Before settling on 8303 MoPac, the cred it union also considered the former Guaranty Bank headquarters building on South MoPac, now owned by Intel Corp., and the University Park office building on the former campus of Concordia University Texas north of downtown. It also considered constructing a building, Budet said.

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