DALLAS-Shutting the book on this year, the Bascom Group has closed three unrelated purchases, totaling 893 apartments in Dallas/Fort Worth and Houston, to bump its Texas portfolio to 2,007 units. Looking ahead, the Irvine, CA-based investment group plans to open the New Year with four closings, the first round in a plan to spend another $200 million in the state in 2006.
Though Bascom won't confirm it, industry sources estimate the multifamily properties and planned renovations will represent about a $20-million investment when all is said and done. The triple takedown consisted of the 372-unit Diamond Ridge Apartments at 8039 Chariot Dr. in Dallas; 208-unit Fair Oaks Apartments at 301 Fair Oaks Blvd. in Euless, which was bought on the Tarrant County Courthouse steps; and 313-unit St. Andrews Place at 16203 Buccaneer Lane in Clear Lake near Houston.
Ryan Akins, Bascom's regional director, tells GlobeSt.com that Diamond Ridge, a 32-building holding on 13.3 acres was 76% leased when it was bought before it could hit the market. The seller is an Oakland, CA-based investment group that was represented by Brian O'Boyle with Apartment Realty Advisors' Dallas office. Like the other just-bought properties, Diamond Ridge's upside lies in its vacancy. The submarket's average occupancy hovers 90%.
The East Dallas complex is a mix of 216 one-bedroom units, 106 two-bedroom apartments and 50 townhouses. Units range from 563 sf to 1,118 sf, with monthly rents averaging $541 or 75 cents per sf.
The Euless complex was 78% occupied when Bascom pocketed the deed in a foreclosure sale by JPMorgan Trust Co., trustee for a bondholder group led by Denver-based Madison Capital Management. Bascom, the only bidder to show up at the sale, got a 15-building holding on 9.62 acres, with one-and two-bedroom units ranging from 504 sf to 1,004 sf. Monthly rents are $568 or 71 cents per sf. "It's very far below market," Akins says.
"They bought it at a price that when the rehab is brought to market, it will still be under the market's stabilized value," says Tom Warren of Hendricks & Partners' Dallas office, who co-brokered the deal along with associate Michael Miller and ARA's O'Boyle. Warren says the renovated complex, developed in 1981, will clearly be a class B when Bascom's done with the work.
The 12-building St. Andrews Place, positioned on 8.54 acres, was 68% leased at sale time, primarily due to deferred maintenance, according to Akins. "This will be the biggest rehab of all the ones that we've bought in Texas," he says. The one, two- and three-bedroom apartments and townhouses range from 490 sf to 754 sf; average monthly rents are $752 or 86 cents per sf.
Bascom bought the Clear Lake property from TriMont Real Estate Advisors Inc., an Atlanta-based asset manager for Fannie Mae. Jim Hearn and Ed Cummins with Hendricks & Partners' Houston office brokered the deal. "We did have to get competitive on terms to get the deal," Akins says, adding the final price was still "significantly below comparable properties in the submarket."
Greystar Management Services LP of Dallas will oversee Diamond Ridge and its Houston team will take care of St. Andrews Place while Encore Management Co., also from Dallas, will handle Fair Oaks. Bascom's long-time general contractor, Commercial Services Inc. of Anaheim, CA is ramping up teams in Dallas and Houston for the renovations. The three rehabs, which vary in scope, will take about a year to complete, according to Akins.
As with the other properties that it's bought in Texas, Bascom's game plan calls for a two- to four-year hold. Bascom, which opened its Texas office in August, has four more properties, exceeding 2,000 units, set to close in January and February, Akins says. Plus, negotiations are under way for another 2,500 apartments in the state. Besides Akins, Bascom's closing team includes Chad Sanderson, Jerry Hess and Jerry Fink.
Akins says another five people, mostly analysts, will be brought on board in the regional office in Dallas before June to accommodate the deal flow. "We think we're here at the right time," Akins says. "The improving fundamentals of the market support our business plans."
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