SoCal Buyer's $4M Takes 138-Unit Repositioned Asset From LNR

ARLINGTON, TX-LNR Properties Inc. has collected $3.8 million from the sale of the 138-unit Andrews Mark Townhomes after spending 18 months on the repositioning of a foreclosed asset and investing $524,400 into a full overhaul.

The Miami-based LNR handed off an 84%-leased complex to a first-time Texas buyer, Investment Apartments LLC of San Jose, CA. The 33-building complex at 701 E. Arkansas Lane required changing brokerage houses and several contracts by different prospective buyers before a sale could be sealed, says Peter J. Hartnett, senior investment adviser in Dallas for Phoenix-based Hendricks & Partners. He tells GlobeSt.com that he fielded a call from an LNR top executive who said "if you can sell it, it will speak volumes for Hendricks & Partners."

According to Hartnett, Andrews Mark's run on the market lasted one month, with the winning contract spending 2.5 months in escrow. He says the SoCal buyer, led by Doan Vohoang, wasn't the highest of the six offers for the 10.5-acre asset, which was listed at $4.1 million. "We turned down a higher offer because we felt they weren't as qualified as the outside buyer," he says, adding the deal closed at 2.6% cap rate based on actual numbers.

Hartnett says Andrews Mark was 70% leased when he and George Deuillet III got the listing. Before the deal could close, the lender required occupancy to be 83%, he adds. Kirk Slimmer with TransLending Corp. in Denver arranged financing through Chicago-based LaSalle Bank, with Vohoang kicking in 1031 exchange funds from a multifamily sale in his home territory. Chad Brozavich with Re/Max Commercial in Dallas represented the buyer.

"He bought it as a value-add play," Hartnett says, citing lease-up as the upside. The new owner has hired Devonshire Properties to oversee the 35-year-old complex, of which 94% of its units are two- and three-bedrooms. The two-story townhouses, all with private yards, average 1,148 sf. The average rent is $637 per month.