PNL/Blackacre SW LLC took the properties as settlement in lieu of debt. In Arlington, the mortgage holder got 589 units at the Eastwood, Westwood and Ballpark Apartments in the high-traffic Collins Avenue corridor near Interstate 30 in Arlington. In Dallas, it got the 85-unit Highland Court near the boundary line of Highland Park, one of the city's priciest residential areas.

Two more properties are ticketed to go back to PNL/Blackacre. One, though, won't be "friendly," David W. Porter, PNL Cos.' president, tells GlobeSt.com. For now, he's not saying which two in the eight-property portfolio are in jeopardy.

The pool, acquired in September, consists of 201 units in Houston; 182 in Flagstaff, AZ; 74 in Phoenix; 72 in Grambling, LA; 54 in Grand Junction, CO; and 48 in Russellville, AR. All have different owners and most were built in the late 1960s. Overall, occupancy was 85% at sale time for the class B and class C package.

The Arlington owner owed about $15 million on the 75%-occupied trio, built in 1968 and 1969, Porter says. The Dallas property, which was 65% leased, had $1.9 million in debt against it. Both property owners are Dallas-based limited partnerships that aren't being identified, but were "significantly in arrears," says David Stahl, PNL's vice president.

Myan Management of Southlake, TX has been hired for the repositioning, which includes upgrades to the four metroplex complexes. Up to $2 million will be pumped into the Arlington trio while $300,000 has been earmarked for the Dallas holding, the executives said. The end goal is not to change the class C status, but take care of the deferred maintenance, they stressed.

Dallas-based PNL Cos. and Blackacre Capital of New York City started teaming in 1995 to invest in loans and turnaround real estate. Porter says multifamily vacancies, without a doubt are at their highest point in five years, but foreclosures or take-backs of any type seem to be about the same as in years prior. That, Stahl is quick to point out, is due to low interest rates.

The Arlington and Dallas properties were leveraging non-recourse HUD loans that exceeded their value, Porter says. Part of that was due to age and part due to market conditions. Stahl predicts the class C properties will be stabilized in six to nine months once the upgrades are done.