$3.6M Backing 137-Unit Turnaround Plan

Gillean Properties Ltd. took the deed to London Manor Apartments at 9825 Webb Chapel Rd. with a $2.5-million check and immediately renamed it to Chase Place. The 85%-leased holding now is getting an $800,000 makeover, Tim Gillean, president, tells GlobeSt.com.

The 10-building complex, which has about 10 Section 8 tenants, has units that average 987 sf in one-, two- and three-bedroom designs. Rent, for now, is running 60 cents per sf in a submarket that easily is supporting 70 cents per sf, he says. Eventually, the all-bills paid status will change as well.

Chase Place gives Gillean Properties more than 1,000 units in the North Dallas neighborhood. The newest buy is around the corner from last year's acquisitions, Gage Place Apartments and Spanish Gardens. The growing portfolio also contains another 400 units in Irving.

Gillean Properties placed the $3.6 million of new debt with Colonial Bank, satisfying the seller, Lennar Corp., the lender's asset management group. Denise Cansler of Colonial Bank's Dallas office arranged the financing: a three-year loan with an interest-only, 18-month clause and an interest rate with a 5% floor. Gillean says the loan represents an 80% loan-to-value ratio.

Gillean says the scenario had Miami-based Lennar starting the bidding action for the foreclosed asset, once owned by Silver Skies Management in Dallas, at $1.8 million, then bumping the price to $2.2 million and subsequently backing out when he and another would-be buyer started to drive the bottom line. "We were prepared and ready to go get it," Gillean says of the win that closed at roughly $18,500 per unit. Larry Gorzyski of James M. Brown Partners in Dallas represented Gillean, who says he tried to buy the property before it went to the courthouse auction.

The gated community is getting Gillean's usual top-to-bottom, inside-out retooling with in-house crews. Gillean also will place an in-house management team on site to help oversee the turnaround.