$100M Value-Add Fund Jumps at 312-Unit Offer

DALLAS-An investment group, with a $100-million fund targeting value-add deals, has closed on a 312-unit complex in East Dallas, pre-empting the marketing with an offer of roughly $34,000 per door. The buyer moved to place the contract as soon as the acquisition opportunity went down on its desk.

The Bridgeport, a class B-minus asset at 5440 N. Jim Miller Rd., was 94% occupied when the deed changed hands. Tom Warren, a senior executive for Hendricks & Partners in Dallas, says he had met with the Montgomery, AL-based fund's leaders a couple weeks prior to Bridgeport's 12-year owner agreeing to list it. "When we knew we were going to take Bridgeport out, we took it to them," he tells GlobeSt.com. "They said it fit their parameters. We were under agreement in a couple weeks."

Warren says the new owner will undertake a minor rehab at the 23-year-old complex, but added value will come from the management change. Internet research shows the fund's affiliate is Summit Asset Management LLC. "They will increase the overall look of the product and manage it better," he says, citing rent upticks as a likely part of the changing of the guard.

The 10-acre asset, sold by DP Partners Ltd. of Dallas, has 196 one-bedroom and 116 two-bedroom units, averaging 770 sf. The average rent is $588 per month.

The closing price is off limits, but comparable properties in East Dallas are bringing $32,000 to $37,000 per unit. A local source says it weighed at the middle of the scale.

Warren says the Multifamily Capital Appreciation Fund-2007 LLC is positioning acquisitions for a three- to five-year hold. It doesn't have any set allocation per market or metro, he adds.

Warren partnered with Hendricks' brokers, Ed Cummins, Jim Hearn and Ryan Terrell, all in Houston, to work out the deal. The quartet is the seed for an internal group that Warren set up to accelerate deal flow. Chris Thomson, formerly with Brama Ventures in Dallas, recently joined the group. Warren says other brokers could follow as the team proves the structuring can push deals across the closing table at a faster pace.

"We're still very much a part of the Hendricks' team," Warren stresses. "We just have a team with the right people playing the right positions so that transactions are accelerated and the breakdowns that normally occur are either mitigated or don't happen at all."

Warren says the team members have different strengths, with each one responsible for a part of the deal process. He says his role and his strength is establishing national business, but he's "horrible at the day-to-day minutia" so there's a pro on the team who picks up that load. Another one sources the deal and there's also a closer.

"In a traditionally run deal with no hurdles, the method wouldn't change the timing that much," Warren explains. "It's the transactions where there are problems. We want the sellers' concerns and the buyers' concerns to become our concerns."