PLANO, TX-American Communities of Dallas has staked its claim in Plano with its buy of two properties – Cornerstone Ranch and Laurel Ridge – totaling 368 units. Now that the transactions are closed, the goal is to upgrade both properties and to rebrand them under the company’s Bel Air moniker.
Though Mosaic Residential of Houston was listed by the Collin County Appraisal District as the owner of the two properties (and had acquired both assets in 2007), American Communities’ CEO and president Ronny Guerrero says he struck the deal with the seller’s equity partner, Dome Equities LLC of New York City.
“We’re very familiar with the Plano market, and knew this was a good opportunity,” he says. “These are our first two acquisitions in Plano. We looked at the market for a long while, and are glad to be in it.”
Cornerstone Ranch is at 1717 Independence Pkwy., while Laurel Ridge is at 2821 Townbluff Dr. Both multifamily properties have occupancies in the mid-90s.
In addition to the two Plano properties, American Communities acquired the 92-unit Islands West at 2700 Rock Island Rd. in Irving, TX, which will also sport the Bel Air brand following upgrades. Guerrero tells GlobeSt.com that, unlike the Plano deals, the seller, a private entity based in Santa Barbara, CA, approached him to gauge his interest in buying. Islands West is 88% occupied.
“We typically don’t look at properties less than 100 units, but when I looked at it, I could see some upside in repositioning from a management standpoint,” Guerrero explains. “The property itself was in good condition, plus we have two other properties in the area. It made all the sense in the world to rely on economies of scale to operate them.”
American Communities acquired the three properties during a time in which competition is fierce for all versions of multifamily properties, from value-add to class AA. Guerrero acknowledges that when his company entered the market late 2007, skepticism abounded. “They used to call me crazy when I was buying in 2009-2010. They’d ask ‘have you read the newspapers?’” he said. “Now everyone is reading the papers and they want to be in this business.”
He does acknowledge, however, that it’s more difficult to find ideal multifamily properties these days than it was in the direct aftermath of the Great Recession. Guerrero says American Communities builds its competitive advantage out of using its financial resources to get the deal done, then raising the capital to finance. Furthermore, American Communities examines assets that may not, on the surface, have any kind of upside. “We’ll look at it on a different angle,” Guerrero explains. “If we see inefficiencies we can fix, we’ll go after the assets.”
Guerrero says American Communities is ready to go under contract on another property in the Dallas-Fort Worth area; and another is in the pipeline behind it. Though he declined to discuss the pending deals, he did say that the company’s goal is to target DFW to assemble a multifamily portfolio. “Once we’ve done that in the DFW market, we’ll possibly move to another one,” he adds.