MESQUITE, TX-A tax-credit group has bought the 352-unit Hillcrest Apartments, a class C property that's now in line for a $12,000 per unit overhaul. The trade was sealed at 96% of the $9.95-million ask, selling at a 7% cap rate.
Summit Asset Management of Montgomery, AL took the deed to the 19.04-acre complex at 2019 Hillcrest St. from Skyline Properties of Dallas, the developer of the 95%-leased asset. In fact, the long-time ownership was what made the deal fly, according to Tom Burns, senior investment adviser in Hendricks & Partners' Dallas office. The buyer must have properties that have been held at least 10 years by one owner. "That's not easy to find," he says.
Burns tells GlobeSt.com that the 36-year-old, 21-building Hillcrest Apartments had five offers, but "we got the right offer very early." Because it was switching to a tax-credit property, the deal took five months to hit the closing table, he adds. Occupancy ticked up three percentage points during the wait.
Burns says Summit's plan is to renovate and "then test the market with some rent increases." The one-, two- and three-bedroom units, ranging from 655 sf to 1,095 sf, bring in $741 per month apiece, on average, of rental income.
Burns and Jay Gunn, also a Hendricks & Partners' senior investment adviser, have led the disposition of four properties in Kansas City, Albuquerque and Dallas for the seller. "Their decision was driven by current market conditions," Burns says, adding that Skyline Properties is holding onto several smaller multifamily properties in its portfolio.
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