Multifamily Buyer Boxes Back-to-Back Deals

FORT WORTH-In a $21.3-million deal, a New York City-based investment firm has acquired its second multifamily property in North Texas. And, it's under contract to close on a third one this week.

Abacus Capital Group LLC has brought in long-time partner, Colonial Properties Trust of Birmingham, AL as operator and minority partner in the deal as it did last fall when it put direct deals into motion to acquire two class A complexes in North Fort Worth from Stockton, CA-based A.G. Spanos Cos., according to Benjamin Friedman, Abacus' president. The newest deed is the 240-unit Fairmont at Fossil Creek Apartments at 3701 Fossil Creek Blvd., situated about 2.3 miles south of Abacus' first buy, the 288-unit Belterra Apartments at 7001 Sandshell Blvd. Before this week ends, Abacus will close on a 214-unit, class A property in Allen.

"We are looking to acquire $300 million of apartments this year. I can't say what share Dallas/Fort Worth will have," Friedman tells GlobeSt.com, "but this isn't the last asset we will acquire there." Colonial also will get a stake in the Allen deal, he adds, but it's not an exclusive arrangement so the door is open for other partners for other deals so Abacus can meet its investment goal.

As the industry's aware, Colonial has been churning its portfolio to get newer and higher end properties in its grip. The Abacus partnership has provided an inroad, including a JV-developed property in Austin. Friedman says the 336-unit Colonial Grand at Canyon Creek is in lease-up and will be put up for sale at the end of that cycle. "They are very strong operators and managers," Friedman stresses, "and we're not in that business. We're in the investment business."

The North Fort Worth and Allen properties are being eyed as three- to five-year holds. "Each asset plan is a little bit different," Friedman explains.

Friedman says the expectation behind the Fairmont acquisition mirrors that of the now 96%-leased Belterra, where the improved market set up a 16% occupancy gain, rent hike and concessions' burn-off within four months of acquisition. Although there's gain to be made from economies of scale, he says the drivers are the North Fort Worth market, proximity to Alliance Airport and its steadily increasing job growth in the corridor. In addition, he says there is added leverage from the high barriers to entry for new supply.

The two-year-old Fairmont is 93% leased, situated on 13.2 acres beside the Fossil Creek Golf Club. The one-, two- and three-bedroom units average 930 sf. The average rent is $932 per month. Friedman says the close was made with a Freddie Mac loan arranged by Holliday Fenoglio Fowler LP.