Chicago Buyer Returns to Dallas With 712-Unit Ticket

"We paid significantly below the asking price," Rick Wise, acquisitions director for Waterton Associates LLC, tells GlobeSt.com, "and definitely below the replacement cost....We feel we bought it right given the economy in Dallas." Built in 1996 and 1998, each phase sits on about 18 acres and carries assessments in the neighborhood of $18.9 million from the Dallas Central Appraisal District.

The Charlotte, NC-based Summit Properties acquired the holding in 1999 in a $175.9-million portfolio buy from the former Ewing Properties Inc. of Dallas, now North American Communities. Four years later, Summit has put its entire Texas portfolio on the market: four properties in Dallas and two in Austin. Camino Real, built in phases at 4200 and 4300 Horizon North Parkway, is the first to sell, trading within 45 days of the contract being placed, Wise says.

Occupancy is just a shade below 90%, but it will be in the low to mid-90% in a few months, Wise predicts. The game plan leads off with a renovation of $750,000 to $1 million, focusing on retrofitting two clubhouses and adding a multimedia theater and business centers. The asset came with no deferred maintenance and units in good condition so work will concentrate on grooming the exterior and beefing up the amenity package.

The 46-building complex has an average monthly rent of $940 plus utilities for units averaging 859 sf in a mix of one-bedroom, one-baths and two-bedrooms, two-bath designs with attached garages and fireplaces. The gated community has three swimming pools, two Jacuzzis, two indoor athletic courts and Ewing's signature drive-in mail kiosks.

Brian O'Boyle and Jerry Lamm, principals in Apartment Realty Advisors of Dallas, brokered the transaction. Waterton pulled capital from the Residential Property Fund VII, a $270-million joint venture pool with CalSTRS. Wise says Camino Real was the eighth acquisition, taking the fund's total draw-down to about $150 million since it launched in August 2002.

Waterton's return ticket to Dallas is fueled by a plan, with a five-to-seven-year hold strategy, to spend another $50 million to $75 million in the coming year to acquire more class A, value-add multifamily properties in the Big D and Fort Worth. No other properties are under contract at this time, according to Wise. At one time, Waterton owned several properties in the DFW region then sold all but the 364-unit Sienna Springs at 9455 Skillman St. in Dallas.

"We believe strongly in the long-term fundamentals of the market and we think now is a great time to buy there," Wise emphasizes. Waterton's hiatus was tied "to the lack of opportunities. The pricing had not adjusted enough for us to believe we were finding economically feasible deals," he says. "We believe Dallas has hit bottom...and we see opportunity."

The eight-year-old Waterton's portfolio consists of 14,500 units in 41 properties in Miami, Atlanta, Detroit, Denver, Phoenix, Las Vegas, Seattle as well as Dallas and its homeport, Chicago. Like its other holdings, Waterton Associates will manage the Camino Real.