Drever Opportunity Fund II, sponsored by Tiburon, CA-based Concierge Asset Management and Omaha-headquartered Magnum Opportunity Fund, sold the 218-unit Regional Place at 3037 Mustang Dr. in Grapevine to a limited liability company from Bonsall, CA for 95% of the $7.8-million ask, George Deuillet III with Hendricks & Partners in Dallas tells GlobeSt.com. Drever bought Regional Place in a 1,038-unit portfolio of foreclosed properties from Horsham, PA-based GMAC Commercial Mortgage Corp. for $29.2 million.
"The buyer will finish the rehab of the interiors as they turn, then pump up the rents," Deuillet says. The buyer's broker, Mike Phillips of Phillips Commercial Real Estate Services in Dallas is taking over management from the seller's team, Greystar Management Co., also from Dallas.
The 93%-leased Regional Place was on the market 30 days. "We had a lot of interest in that deal," Deuillet says, citing eight "solid" offers at the end of the day. In a slight twist to the offering stack, he says Regional Place also attracted several local owners in addition to the "usual West Coast interest." James Osgood and Steve Sieling with BMC Capital LP in Dallas arranged the financing.
In the past 11 months, Drever has paced Regional Place, built in 1976 on 7.39 acres, through a complete exterior overhaul and cosmetic upgrades to interiors, according to Deuillet. The one-, two- and three-bedroom apartments average 831 sf, with rents ringing up $662 per month as the median. "There's definitely some room to push rents once they upgrade the interiors," says Deuillet, who teamed on the sale with Hendricks' adviser Ed Cummins in Houston. Based on the full ask, the pro forma cap rate was 7.89%.
In Irving, the 176-unit Hidden Village Apartments at 1901 W. 5th St. has brought close to its $5.87-million ask for 12-year owner, S2F Hidden Village Associates LP of San Francisco. The buyer is the Singh Family Trust of Cerritos, CA.
Deuillet says buyer opted to assume the seller's loan rather than take it down on an all-cash basis, driving a re-trade to shave the prepayment penalty from the negotiated price. "The existing note had some good terms," he says, citing a 6.56% fixed-rate interest through the 2011 maturity. With a half dozen offers on the table for an all-cash marketing, the broker says the trust got the nod for its ready-to-spend 1031 exchange funds and willingness to assume the loan.
The 95%-leased Hidden Village needs only minor repairs, according to Deuillet. Bruce Patel of Dabu Hospitality in Irving will manage the 17-building asset, a mix of one-, two- and three-bedroom apartments averaging 796 sf. The 7.22-acre complex, also built in 1976, has an average per unit rent of $570 per month.
Tom Warren, also in Hendricks' Dallas office, and Patel brought the buyer to Deuillet. The trust is "actively buying here. They're looking to buy cash flow," Deuillet adds. "And, they're in the process of buying larger, newer deals here and in Austin." Hidden Village's pro forma cap rate was 8.56% based on the full ask.
Deuillet doesn't the root of the 1031 funds, but does know both buyers sold West Coast properties and brought the gains to Texas. "Clearly, we're seeing the markets turn on well-located apartments," he concludes. "That's what we needed."
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