$6M Buys 216 Units, Starts Makeover

Tim Gillean of Gillean Properties in Plano tells GlobeSt.com that he took the deed to the 216-unit Apple Creek Apartments at 9874 Dalecrest Dr. with a $5.6-million loan from Colonial Bank in Dallas. The newly named Gage Place will get a top-to-bottom, inside-out makeover in a repositioning play to increase rent, which now averages about $550 per month. Once the work is done, Gillean will decide if he's going to sell 10 townhomes, positioned across the street, that came in the 10.7-acre purchase.

The institutional lender acquired the property in a pool buy in November, which also included the 288-unit Autumn Ridge at 9607 Wickersham Rd. and 206-unit Summer Glen at 9624 Rolling Rock Lane, both in Dallas. They are now under contract to an Asian investor, says Michael Lewis, senior adviser in Dallas for Phoenix-based Hendricks & Partners. The foreclosed owner was a Dallas-based investment partnership.

The all-bills paid Gage Place is bringing in under-market rents, Gillean says, noting that will change as the renovation progresses. Units, which average 1,000 sf for apartments and 1,900 sf for townhomes, will be upgraded as leases roll in the 87%-occupied, 25-building complex. Gillean is aiming to shape a solid class B from an existing class C as he changes the roof line, adds central air conditioning, installs new appliances and most likely gates the perimeter.

Lewis says he knew the holding would be the first to sell in the foreclosed package because it's positioned in a submarket with historically stable occupancies. He and Thomas Emerson Burns, also a Hendricks' senior investment adviser, represent the institutional mortgage holder. Larry Gorzycki of the James Brown Co. in Dallas negotiated for Gillean, one of 10 would-be buyers for the Bachman Lake development. Denise Cansler, a Colonial Bank senior vice president, arranged the financing. The deal puts Gillean's portfolio at 1,000 units.

Lewis says foreclosures are gaining momentum in Dallas-Fort Worth. The problem isn't widespread, but he is predicting some class A properties will be taken back this year. "Poorly run or ill-conceived real estate properties are always the first to go," he says. "Now, with sliding occupancies and lower rent rates, the highly leveraged guys are going to feel the pinch."