The 3,996-unit, class A portfolio is believed to be the largest packaged sale to hit the market in some time and it's certainly the largest for a pair of brokers in the Phoenix office for Dallas-based Trammell Crow Co. TCC vice president Brad Goff cornered the deal in behind-the-scenes dialogue when his longstanding client asked for an analysis as to the portfolio's value on the open market. Goff and associate Bobby Bull are now steering Bigelow's campaign to harvest a four-year investment in a niche package that's being eyed by conversion pros in hotels and multifamily sectors as well as pension funds, institutional investors and a contingent of private capital syndications.
Bull tells GlobeSt.com that more than 100 offering memorandums--all sent to US-funded buyers--were mailed in the last two weeks. "We know there's a lot of capital chasing only a few portfolio listings so the kettle is overflowing with buyers right now," he says. "We need to find the needle in the haystack." He says Bigelow is selling out of Texas, but holding onto Budget Suites' portfolios in Nevada and Arizona in a plan to parlay the proceeds into traditional, class A multifamily investments on the West Coast.
Bull says the portfolio has $112 million of assumable debt with US Bank, Nevada State Bank, San Diego National Bank and Flag Bank or can pass muster to be acquired with new debt. His best guess is it will take six months to reach the closing table. "When we feel we have the best offer from the most qualified buyer is when we stop sending out the marketing information," he says of a listing, without a deadline, that breaks down to $65,065 per key for construction that's four years old or newer.
The properties target a rental market for stays of two days to two years for one- and two-bedroom designs that can swing to hotels or apartments in key locations. The Texas portfolio ended 2003 with an overall 70% occupancy for units with rents that vary by market, but basically go for $59 daily to $999 monthly. Bigelow's in-house management company oversees the properties.
The smallest property is 282 units at 10222 Walton Walker in Dallas; the largest is 424 apartments at 2175 S. Highway 121 in Lewisville. The portfolio's 2004 NOI is projected to exceed $18.9 million with cash flow after debt calculated at $4.3 million, according to the marketing package. Though cherry-picking isn't likely in today's unseasonably hot hotel market, the least expensive price tag is $19.1 million for 372 units at 2770 N. Highway 360 in Grand Prairie to a high of nearly $27.5 million for the 408 apartments at 8150 Stemmons Freeway in Dallas.
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