"Basically we are hedging our down stroke by doing two phases," says Justin R. Meszaros, executive vice president and partner of Boston -based investment group. He tells GlobeSt.com that the third property tour at 11201 E. Lake Highlands Dr. sparked the idea for a value-add play based on splitting the phases, with the plan quickly going into action to pre-empt marketing being planned by CB Richard Ellis senior vice president Nita Stewart. CBRE senior vice president Dirk Goris negotiated the buy side.

Highlands' 224-unit first phase will be upgraded to a class B, gated and renamed to the Arbors. The 132-unit second phase will be upgraded too, but will still only climb to class C plus. Its new name is Casa Serena. Meszaros says the strategy "allows us to get Casa Serena filled so it's cash flowing and be a little more patient with the Arbors and ensure that we get the right residential profile in the Arbors." The investment schedule allows two years to complete the plan, he adds.

To expedite the plan, the Lindahl Group has hired Barry Weaver as vice president of its management company. Weaver, who had been overseeing a 20,000-unit portfolio, will be the point man for the value-add play at the new acquisition. Meszaros says meetings with architects and contractors began Friday, the day after the deal closed. Work will get under way in the coming week, starting with the gate installation at the Arbors.

Meszaros says the Lindahl Group made the close with 85% loan-to-value, non-recourse financing with a five-year term, Libor-based rate and interest-only payments. Jason Rice with Quantum First Capital LP in Dallas arranged the financing with Baltimore-based Legg Mason Inc.

Lindahl Group bought the 11.9-acre project, developed in 1971 and 1979, from Highlands Apts Owners LLC of New York City, getting an 81%-leased first phase and 78%-occupied second phase. The unit mix has efficiencies, one- and two-bedroom floor plans. The Arbors' mix averages 723 sf; Casa Serena, 816 sf. Average rents range from $580 to $615 per month.

"After we reposition the Arbors, we will probably be able to have 3 to 4% rent growth over the next couple of years," Meszaros says, pointing out that's merely a "conservative estimate." He says the buy will be fully cash flowing as soon as the Abors' 81% occupancy exceeds 90%.

Meszaros says the plan is based on a three-year hold. But, he adds, splitting the assets opens the door to spin off Casa Serena at any point in time.