GlobeSt.com EXCLUSIVE: $233M Portfolio Sale Draws to Close

The Dallas-based LBK LP, led by Ronald Beneke and John Krieg, has a second portfolio sale under way in California. The five-property sell-off is being handled by a CB Richard Ellis team in Los Angeles.

But by month's end, a trio of Moran & Co. brokers will be able to stamp their end of the disposition as done. After an extensive review of possible takedowns, the sellers opted to split the Moran-marketed package between the Chicago giants of Capri Capital Advisors and Henderson Global Investors, save for the upcoming closing on 300 units in Dallas. Details about that sale are being kept under wraps until the deal's inked.

Paul Harris, Moran's managing partner in Dallas, tells GlobeSt.com that 60% of the $232.7 million is tied to assumable loans with tax-regulatory restrictions that bar any changes in the affordable housing component before 2007. Some properties are restricted until 2009. The pre-1986, tax-exempt bonds mature in 2025 for the most part, Harris says. Overall, the buyers can expect to generate "above-market, first-year cash-on-cash returns" due to low tax-exempt interest rates, he explains.

The class B and class A-minus properties have occupancies ranging from 91% to 97%, according to Harris, who teamed with Thomas Moran in Chicago and Richard Lundregan in Virginia to hawk the package for LBK. Eighty offers were on the table, of which 20 were for the full portfolio. "It's a turning of properties in an ordinary course of doing business," Harris says. "These owners will be out there buying again."

JP Rachmaninoff, acquisitions and dispositions director for Henderson, says the firm put in a bid for the entire package, including those in California, but it was outbid for everything but Texas. Henderson used its Casa Partners III LP fund, which targets bond-financed and value-add properties, to buy the 300-unit Village at Central Park at 2300 Central Park Blvd. in Bedford and the 304-unit Landing at Bear Creek at 1130 Bear Creek Pkwy. in Euless. The class B properties, built in the 1980s, have occupancies hovering 90%. Rachmaninoff says the assets, like the others, have 20% reserved for residents earning 80% or less of the area's median income.

Capri got the 732-unit Rolling Brook Village at 1723 Long Shadows Court in Woodbridge, VA; 360-unit Oaks at Mill Creek at 653 Monument Rd. in Jacksonville, FL; 320-unit Vinings at Palm Bay at 1000 Palm Place Dr. NE in Palm Bay, FL; 300-unit Ashley Lake Park at 5020 Ashley Lake Dr. in Boynton Beach, FL; and 202 Village Place Apartments at 211 Brandywine Rd. in West Palm Beach, FL.

"All five properties boast occupancy rates greater than 94% and are in markets that support condominium conversions," Scott Kupferberg, Capri's EVP, says in a prepared statement. None of the properties, though, are eligible for conversion until 2007. According to the Moran team, about 41.5% of the portfolio's pro forma NOI is projected to come from the Woodbridge property, located on the outskirts of Washington, DC. Another 36.5% is projected to be derived from the Florida properties.

The LBK partnership acquired the mid-to late 1980s-era product in various transactions about eight years ago. All are located in high barrier to entry markets.