$19M Loan Backing 692-Unit Repositioning Play

Cash Investments of El Paso, which has the bulk of its repositioned assets in its homeport, bought a 75%-leased portfolio from Blue Valley Apartments Inc. of West Palm Beach, FL, the servicing agent for Fannie Mae. The just-bought assets, all part of the Skillman Street corridor, are the 200-unit Oakwood Springs at 8201 Fair Oaks Crossing; 340-unit Waterford Terrace Apartments at 9505 Royal Lane; and 152-unit Jackson Creek at 11601 Audelia Rd.

The portfolio has units averaging 840 sf and monthly rents of 68 cents per sf, says Gregory Pappas, senior managing director in Houston for Holliday Fenoglio Fowler LP. "They aren't planning on hiking the rent," he tells GlobeSt.com. "The upside, from their standpoint, is improving occupancy."

Pappas says $2.5 million has been set aside from the two-year loan with Cleveland-based KeyBank to renovate the properties, developed between 1977 and 1980. He says the floating-rate financing, which kicks in at a 5% interest, represents an 85% loan to value. There were several lenders competing for the deal, but the pack was weeded by the portfolio's occupancy and renovation needs, Pappas says, adding the deal cleared all hurdles due to Cash Investments' strong 20-year track record as a repositioning pro. The buyer's subsidiary, Integrity Asset Management, will oversee the properties, which tax records show went back to the lender in July 2004.

Oakwood Springs, positioned on 7.8 acres, is assessed at $5.4 million by Dallas Central Appraisal District. Waterford Terrace, sitting on 12.2 acres, carries a $7.8-million assessment. The 6.9-acre Jackson Creek's value is tagged at $3.1 million.

HFF's Roberto Casas, associate marketing director in Dallas, and William Miller, a director in Houston, marketed the package of gated complexes for 30 days. In a press release, Casas indicates Cash Investments has Dallas on its radar screen.