436-Unit Deal Starts $100M Spending Spree

GRAND PRAIRIE, TX-The Irvine, CA-based Passco Cos. LLC has taken its first deed in a $100-million-plus shopping spree planned for the next nine to 12 months in North Texas. The first to fall into the tenants-in-common group's hands is the 436-unit Towns of Riverside, a 55-acre, golf course-fronting development off Interstate 360.

Gary Goodman, Passco's senior vice president, tells GlobeSt.com that the all-cash buy is the first, but there's another class A closing for a 300-unit complex planned for September in Dallas. The Towns of Riverside, like others that will follow, has hit the TIC market, with the deal already 90% committed. "We're likely to do it with less than 35 investors," he says.

Cushman & Wakefield of Texas Inc.'s multi-housing powerhouse team of Don Ostroff and Will Balthrope marketed the 2803 Riverside Parkway development for $43 million. Neither the brokers nor the buyer will talk about the price because Riverside's $28.4-million assessment was hiked nearly $10 million for the upcoming tax year. What can be concluded is that the 436 prized units, with European cabinetry and wood-burning fireplaces, reeled in roughly $65,000 per unit based on comparable submarket sales.

The 95%-leased mix of one-, two- and three-bedroom units will continue to be managed and leased by its seller, Westwood Financial Corp. of Dallas. The units range from 722 sf to 1,454 sf; rents are $735 to $1,450 per month.

Ostroff says Westwood bought the 59-building Riverside shortly after the Canadian-based Fram Building Group developed it in 1999. Westwood held on through the multifamily market's tough times and then debuted it on the market when the "premium" to sell fell into place, according to Ostroff. He says long-time owners "are seeing the current time is a good time to sell" due to the region's strong recovery and still low interest rates.

Ostroff says Passco was up against 15 other would-be buyers jockeying for a development with two-story townhouses, private entrances and garages. "They were effectively in a three-way tie for the lead on pricing, but overall they were the best bidder," he says.

Goodman says Riverside is scheduled as a seven- to 10-year hold. The acquisition was closed with financing from Greenwich Capital Markets Inc. of Greenwich, CT.

Passco is looking to buy retail and multifamily in Texas. It started buying one year ago in Houston, accruing 750 units in three multifamily properties. In Houston, Passco's Goodman is holding a contract for a fourth apartment complex--380 units set to close in August--and one for a piece of retail. His scouts are out in San Antonio as well.

Just in North Texas, Passco plans to spend upward of another $100 million for four to six more properties. "We're just getting started," says Goodman, who has amassed more than 3,000 units for Passco's multifamily portfolio in the 18 months since he came on board to run the drive.