Three California Buyers Close on 277 Units

The just-closed deals are the 113-unit Irving Oaks Apartments at 1928 Rock Island Dr. in Irving; 108-unit Emerald Run at 7500 Maplewood Ave. in North Richland Hills; and 56-unit W. Spring Valley Rd. in Richardson. "All three were California investors looking for cash flow and all three provided that," Christopher Deuillet, senior associate with Marcus & Millichap Real Estate Investment Brokerage Co. in Dallas, tells GlobeSt.com.

Deuillet says Irving Oaks Apartments, the only class B in Deuillet's trio of sales, has sold for 94% of the $3.65-million ask to a Los Angeles investor in a 1031 exchange of a multifamily property in his homeport. The buyer, who owns nearly 400 units in Sherman, TX, assumed $3.02-million loan with a 10-year term and 7.02% fixed-rate interest. Deuillet explains the buyer's track record in Texas helped to secure the lender's nod for the assumption.

The broker says the 83%-leased Irving Oaks was on the market two months, getting seven offers. "Once he tightens up occupancy, with a highly leveraged property, his cash flow will increase exponentially," Deuillet says, citing a 9.1% cap rate at the closing for the Dallas developer of the 1980s-era complex.

The 6.7-acre Irving Oaks has one-, two- and three-bedroom apartments, ranging from 693 sf to 1,125 sf. Monthly rents start at $475 and top out at $775.

Emerald Run, bringing 99% of the $2.9-million ask, had 20 offers, fell out of contract twice in the past two years, but finally sold to a San Francisco investor, according to Deuillet. The hurdle was its tax-credit status, which burns off in November, and its advantage is a location near the Loop 820-Texas 183 junction plus a rent spread that's $150 per month below the tax-credit ceiling, Deuillet says.

"It's a prime example," Deuillet adds, "of sitting on the market and the market caught up to it. Two years ago the 8.8% cap rage was somewhat aggressive and today it's more attractive." Emerald Run's seller is a Denver syndicator now reinvesting capital into Colorado after closing out the seven-year hold, Deuillet says.

The 94%-leased Emerald Run, built in 1969 on 4.51 acres, also has one-, two- and three-bedroom apartments in five floor plans ranging from 730 sf to 1,240 sf. Its rents are $465 to $755 per month.

The fully leased Ashley Place sits less than two blocks from the Central Expressway and Spring Valley exit, a 2.54-acre footprint that's the closest multifamily residential property to the freeway. Deuillet says the Danville, CA buyer beat his competitor by pushing past the $1.99-million ask to deploy 1031 exchange funds from a multifamily sale in his home territory. He says the seller is a Dallas investor, who bought the asset on the courthouse steps a year ago with the intent to quickly renovate and sell. The broker says Ashley Place's contract was inked within two weeks of the marketing launch.

Deuillet says the deal's upside is the open door to raise rents. The 13-building Ashley Place has one-, two- and three-bedroom apartments. The 705-sf to 1,540-sf units bring in $499 to $750 in monthly rents, delivering an 8.35% cap rate at the closing table.

Jerry Luterman with Marcus & Millichap in Dallas represented the buyer of Irving Oaks Apartments. Marty Kleckler with Lone Star Commercial Co. in Lubbock bargained for the seller of Emerald Run while Deuillet soloed on the Ashley Place transaction.