California Buyer Steps Up for 276-Unit Royal Oaks

Seeding the play is a TIC group that was required to set up a pair of limited liability companies to close the deal for the 92%-leased asset at 602 W. Pioneer Parkway in Grand Prairie, Peter Hartnett with Hendricks & Partners in Dallas tells GlobeSt.com. Not only was the property posted and under the guardianship of Miami-based Lennar Partners Inc., but it required a $6.64-million loan assumption to push the transaction across the closing table, he says. "It was one of the hardest deals I've done to date," he says.

The California buyer put down 8% from a 1031 exchange and assumed a loan with a 25-year amortization, 6.90% fixed-rate interest and October 2011 maturity, according to Hartnett. The low down payment is "what made it a sweet deal," he stresses.

Hartnett says the new owner will invest another $100,000 into immediate repairs and then tackle occupancy to raise the return margin. "Economically, it wasn't a homerun," he says. "This deal does make money. It just didn't make a lot of money on the initial investment."

Royal Oaks Apartments' mix is 89% two-bedroom designs. The one-, two- and three-bedroom units average 925 sf; monthly rents average $685. Built in 1970 and renovated in 2000, the 39-building, class C complex is situated on 15 acres, within walking distance of businesses, restaurants and a Kroger Signature store.