Bascom Scores Win on 798-Unit Foreclosure

DALLAS-The Bascom Group LLC has grabbed a 798-unit complex to fuel another value-add play in Northeast Dallas, taking over a foreclosed property from Freddie Mac. If market insiders are correct, the Skillman Street property has changed hands for roughly $20,000 per door.

The acquisition of the class B Central Park Crossing at 9350 Skillman St. pushes the Orange County, CA-based Bascom over the 5,000-unit mark after less than one year of buying in Texas, mostly in Dallas/Fort Worth. And, the plan is to double the count before another year passes.

Bascom's regional director Ryan M. Akins tells GlobeSt.com that the 19.4-acre Central Park Crossing is embedded with upside in a 65% occupancy, concessions burn-off and unfinished interior renovation. According to Dallas County tax records, the McLean, VA-based Freddie Mac took back the property in December 2005 from a local partnership led by TriVest Real Estate. Before Freddie Mac foreclosed, TriVest had renovated the buildings' exteriors and completed 30% of the interiors in the 20-year-old, gated complex. Upgrades also were done to the leasing and fitness centers plus landscaping. "It's a beautiful property," Akins says.

Still, Akins knows it's a tough submarket, owning two complexes just two miles to the south. The high-density Skillman Street corridor has had a number of multifamily properties change hands in recent months, including several foreclosures. "It's people who bought in 2000 and 2001 at the peak of the market," Akins assesses, citing widespread heavy concessions caused those owners to "suffer more" than others in the region. Central Park Crossings' concessions are running at 22%, but he believes the market will naturally take care of itself as Bascom's planned two- to three-year hold plays out.

Akins says he pushed to win the deal because the low price per unit delivers a competitive edge on rental rates. Akins' business plan calls for a 5.5% rent hike over time to the in-place average of $580 per month for one- and two-bedroom units, averaging 751 sf.

Nine of Bascom's 12 purchases in Texas have been foreclosures, with distressed submarkets trading at a fraction of pricing levels reached during the 2001 peak in rents and occupancy. "All the trends point to one conclusion: it's time to buy in Texas," says James Dargenio, the buyer's analyst in Dallas. "We need to take advantage of the foreclosure environment before it dries up."

Akins predicts Central Park Crossing will be stabilized in two years. "798 units is a big property. It's going to take time," he stresses. "We don't want to sacrifice tenant quality for occupancy."

Bascom bed down the deal with a 30-day look and 30-day close, securing a short-term bridge loan that was arranged by George Smith Partners of Los Angeles through Capmark Finance Co. "There are not a lot of groups that can get the financing for a deal this size in this location with the current occupancy," Akins says.

Brian O'Boyle of Apartment Realty Advisors Inc. in Dallas ran the sale for Freddie Mac. Akins' team consisted of Jerry Hess, senior analyst for the Texas region, and Dargenio. Seattle-based Pinnacle Realty Management Co.'s Dallas team, which had been property overseer for Freddie Mac, will continue at the helm.