Investors Hyped Over Vintage DFW Multifamily Product

The only common thread for the three deals is category. But, the current activity is a clear indicator of just how hungry the market is for older product. Robert Lankford of Kamco Property Co. tells GlobeSt.com that, of late, more West Coast investors are looking to the DFW region to satisfy 1031 exchanges. The West Coast, he says, "is peaking out in values" and making the metro DFW blink on investors' radar screens. Lankford says demand has been strong for "two or three years" and continues to hold its own despite a softening in occupancy.

An eight-month hold for Tom Voght of Dallas brought "a nice profit" when he sold it in the past week to a local Dallas buyer, who hawked an eight-plex in California to wheel and deal a 1031 exchange. Voght collected about $1.5 million at the closing table for the 60-unit Pebblebrook Apartments, a 33-year-old, class C complex at 2200 William Brewster Dr. in Irving.

Lankford says Voght stepped in, made some upgrades, hiked rent and turned around and sold. The five-building complex on three acres was 95% occupied at sale time. Lankford represented the seller while James Blake of Butler Commercial in Fort Worth negotiated for the buyer.

Shawn Bush of La Jolla Bank arranged the financing, which totaled 75% of Pebblebrook's purchase price. The 25-year loan has a 25-year amortization and came at 5.75% interest with a semiannually adjusted rate.

The 74-unit St. John's Apartments in Hurst brought a little less than $2 million for local investor Tim Gillean of Dallas-based Gillean Properties. Built in 1972, the class C complex on three acres also boasts an occupancy above 90%. Gillean turned it around for a profit in a year, according to Lankford. Penny Tolva of Portland represented the Oregon-based 1031 exchange buyer, who paid $26,351 per unit. The same financing terms applied from La Jolla Bank, but this time the loan represented 80% of the purchase price, Lankford says.

And in Mesquite, the 52-unit Baker Square Apartments at 1809 Baker Dr. drew $38,460 per unit or $2 million for seller, Bay Equities. Pete Hartnett of Grubb & Ellis Co.'s Dallas office represented Bay Equities while Lankford brokered the deal for a North Carolina investor. Again, La Jolla Bank's Bush arranged the financing, with the same terms for a loan representing 80% of the selling price.

Still to come are closings for a 180-unit complex in Arlington, 200 units in Fort Worth and a 45-unit property in Mesquite. "The markets are very, very strong," Lankford says. "But, you have to be poised to move quickly.