GlobeSt.com EXCLUSIVE: Pool Readies Another $100M Buying Plan

In its first year, the wholly owned division of Dallas-based Henry S. Miller Cos. has acquired three multifamily properties with 1,172 units in Plano, Dallas and Spokane, WA and three retail properties, totaling 370,000 sf, in Arlington, Bedford and Harlingen, TX. The second year is off and running with a plan to close this month on a Dallas shopping center. Talks also are close to producing contracts for a 150,000-sf shopping center in Houston and a 120,000-sf office/tech property in San Antonio, Stephen A. Scott, HSM Equity's senior director, tells GlobeSt.com.

Before the year's out, Terry Gwin, president of HSM Equity, and Scott expect to acquire another half dozen of retail, multifamily and industrial properties stretching from Texas to Florida. The duo makes the day-to-day decisions for general partners, mostly high-net worth, US investors who have kicked in another $25 million of equity for the one-year-old division's second-year play. "Our investors want immediate income of at least 8% per year," Scott explains of a strategy with a five-year hold, "and a chance for upside long term in the range of 12% to 16%."

Gwin and Scott have developed a black book with hundreds of investors' names. Sometimes, they've bought for one and other times as many as 20 investors contributed to the play. Buying criteria focuses on class A properties--multifamily complexes with 200 or more units and 100,000 sf or more for retail and industrial assets. Chance Johnson is the multifamily scout and Rick Waggoner is leading the industrial search. When the deals are done, Henry S. Miller Management Co. in most cases gets the leasing and management duties as well as oversight for expansions or rehabs.

Over the weekend, crews kicked off work on $100,000 in upgrades for the portfolio's newest member, the 82,000-sf Harwood Village in Bedford. Gwin says the 20-year-old center, with an 87% occupancy, was bought for $5.4 million in late December. The promise of a facelift prompted Half Price Books to double its lease to 10,000 sf as the sale was closing, he says of a property anchored by a 17,000-sf JoAnn Fabrics & Crafts. The work, he says, will be done within 60 days.

At the other end of the spectrum, the equity group spent $18.4 million for the 160,000-sf Lincoln Corners, a 96%-leased center in Harlingen in the Rio Grande Valley. The team now is planning a 20,000-sf expansion. Also getting some new space is the 83,000-sf Sublett Corners in South Arlington, a 97%-occupied property with another 6,000 sf under construction.