Developer Hands Off 362-Unit, Class A Complex for About $20M

Flagship Properties Corp. got about $55,000 per door for Hidden Creek, an 18.1-acre development at 1200 College Pkwy. in Lewisville. The Denton County asset, developed in 2000, was 93% leased at sale time.

"Other than the debt assumption, it was a very smooth transaction on the buyer's side and on the seller's side," says Henry C. Glasgow, SVP with the Apartment Group in Dallas. It was the seller's preference to parade the property to just a handful of prospective buyers, says Glasgow, who handled the sale along with Apartment Group president Jeffrey L. Price. Glasgow says the assumption added about three weeks to the process.

Waterton Associates, marking its seventh acquisition in Texas, assumed a 10-year loan, due in May 2011, with a 7.01% fixed-rate interest and 30-year amortization. American Property Financing Inc. of New York City is Fannie Mae's servicing agent.

Richard Wise, Waterton's acquisitions director, tells GlobeSt.com that its aggressive offer ended marketing within a week and took the deed within 90 days. He says the buyer's motivation was the price, quality and location. "We feel the price point we paid for this property compensates for the lack of cash flow at the current time," he says. "It will be cash-flow positive within 12 months."

Waterton Property Management is taking over the helm of a property with resort-style amenities, elevators and easy access to Interstate 35. Wise says concessions of two and three months will be dropped to one month, maybe 1.5 months, for the 14-building asset with a mix of one-, two- and three-bedroom units ranging from 566 sf to 1,493 sf. The monthly rents are $695 to $1,375.

Waterton has Dallas/Fort Worth and Austin on its buy list. The investment group, backed by JV partner CalSTRS, closed the Hidden Creek purchase with funds from a $500-million pool set up for class A and B, value-add acquisitions in the US. Though nothing else is under contract in Texas, Wise says he's negotiating for two properties in each of the target metros. If one or both deals come to fruition, he says the next closing could be in late spring or early summer. Wise says this year's objective is to land "two or three more in Dallas" and "one or two in Austin."