Buyer's Return Play Nets 352-Unit Complex

HOUSTON-In a second closing in almost as many weeks, local buyer GALP Highcross LP has bought the 352-unit Sandalwood Apartments from Merrill Lynch Capital Inc., a division of Merrill Lynch Business Financial Services Inc. of Plainsboro, NJ. The final price was kept under cover although similar complexes have sold for $23,000 to $25,000 per door.

The lender was seeking $8.5 million for the class C complex at 311 Highland Cross Dr. Harris County has the asset assessed at $7.4 million.

J. Todd Stewart, senior vice president with CB Richard Ellis' local office, says the lender foreclosed on the Canadian-based owner after a contract fell out with GALP Highcross. "The occupancy began to deteriorate and there were other issues that came up so the buyer elected not to proceed with the deal," he explains.

Stewart says the complex was taken off the market for awhile and then re-listed, with the same CBRE team tapped to handle the sale. "The buyer reappeared and closed the deal," he tells GlobeSt.com. "He was able to strike a deal with the lender and closed it in four days."

Stewart says the new owner will put additional capital into exterior upgrades to bring the 82%-occupied complex to a competitive standard. The complex underwent $325,000 of capital improvements in 2003.

Sandalwood Apartments, built in 1979 on 11 acres, has one- and two-bedroom apartments. Units range from 520 sf to 880 sf, with rents of $409 to $639 per month.

Stewart says the buyer already has a large multifamily portfolio in the area, but is seeking more. "He's looking at the whole gamut, class A infill to class C suburban," he says. "He's closed four apartment deals in Houston during the past 10 months." Most recently, he bought the 534-unit Sierra Vista Apartments at 5500 El Camino Del Rey. Now as before, the CBRE team included executive vice president G. Craig LaFollette, senior vice president M. Todd Marix and senior associate Tre T. Banks.