Backup Buyer's Near-$17M Offer Wins 248 Units

GlobeSt.com sources confided that the Lantana Apartments at 5210 Long Prairie Rd. in Flower Mound came to market at $72,500 per door or $18 million, but the first contract fell out and drove a price adjustment to get the deal closed. The Lantana is one of three apartment complexes in the Denton County city, where most in the industry say it's highly unlikely that any more will rise in its bounds.

Scott Gould, senior vice president for Chicago-based Sherman Residential, tells GlobeSt.com that Lantana's location and quality drove the chase for its first acquisition in a year in the Dallas marketplace. "It's a true supply-constrained market," he says of a property that had a handful of sidelined investors waiting with bids.

Gould, who negotiated the acquisition, says the Lantana was bought with equity from the one-year-old Sherman Real Estate Fund III and a five-year loan with a 75% loan-to-value ratio and sub-5% interest rate from Allstate Insurance Co. in Northbrook, IL. The complex was 90% occupied at sale time.

Represented by Mark Stymiest, Bill Baxter and Dirk Goris, all with CB Richard Ellis Inc. in Dallas, the seller relinquished a three-year-old development with units averaging 980 sf and monthly rents bringing in $935 per door. As is always the case, Sherman Residential, a low-profile, long-term holder, is managing and leasing the gated community.

In the last five years, Sherman Residential has doubled the portfolio to about 8,000 units in six markets, practically half of which are in Texas. The third-generation, family-run Benjamin E. Sherman & Sons Inc. owns five other properties in Dallas, the last of which, Spring Pointe in Richardson, rolled into the portfolio in January 2003. In the next two years, the 82-year-old company, which has shifted the focus to multifamily, plans to own 10,000 units in its existing markets. The buying power is derived from private real estate funds, the first of which launched four years ago. Gould says about $300 million of multifamily properties have been acquired since the launch. The $30-million Sherman Real Estate Fund III is expected to fuel another $120 million or so in acquisitions.