SAN ANTONIO-The American Opportunity for Housing Villas LLC has sold two multifamily complexes, totaling 417 units, to a Denver-based value-add buyer for roughly $13 million. The takeover was structured with a Muni Mae workout for the properties' bond financing.
"Muni Mae tried to sell the bonds. I had a buyer who stepped in to negotiate a deal with the nonprofit to do a deed in lieu of foreclosure," Mike Miller, a San Antonio broker for Hendricks & Partners, tells GlobeSt.com, "and simultaneously close the real estate and the bonds." The exchange rolled deeds to the 252-unit Rancho Mirage at 5903 Danny Kaye Dr. in the Medical Center District and 163-unit Villas of Castle Hills at 1000 Jackson Keller Rd., situated inside Loop 410.
Miller says the new owner, who has three other complexes with nearly 700 units in the city, has his management group, Vision Property Services LLC, overseeing the repositioning play, which will bring cosmetic upgrades and rent changes in the transition from subsidized to market rate. Rancho Mirage is 50% leased; the Villas, 88%. "He's an opportunistic buyer," Miller says. "He will lease them back up, hold three to five years and then sell."
Miller explains that the deed in lieu of action canceled out the subsidization requirement. At the closing, he says Rancho Mirage's units were going for 60 cents per sf in a submarket where the norm is ranges from about 78 cents per sf to 85 cents per sf. The Villas' average rent, at sale time, was 65 cents per sf versus a market rate of 75 cents per sf to 77 cents per sf.
Miller says the deal came together because he knew the nonprofit and its fiscal situation plus knew Muni Mae had been trying to sell the bonds. "I think he'll do well with it," he adds. "He's done well with his other properties. I think he'll extremely well with these."Rancho Mirage is positioned in "one of the hottest submarkets in the city," Miller says. The 33-building complex, built in 1974, sits on 12.5 acres. It has one-, two- and three-bedroom units, averaging 892 sf.
The Villas is a six-acre footprint developed in 1982. It has 36 buildings with units averaging 1,111 sf, also a mix of one-, two- and three-bedroom floor plans.
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