Col. Kevin McMahan of Highland, CA was assigned the purchase agreement by another aspiring buyer of the Peppertree Apartments at 2840 Las Vegas Trail. The Miami Beach-based LNR Property Corp. was off-loading the asset after a foreclosure that stripped all encumbrances, including the deed-restricted land-use pact for rental subsidies. "Sometimes a foreclosure really helps the property," Peter Hartnett, associate partner in Dallas for Phoenix-based Hendricks & Partners, tells GlobeSt.com.
The 6.3-acre Peppertree's 30-day market run produced a sale close to the $2.95-million ask for the 40-year-old mix of one- and two-bedroom apartments, with eight floor plans ranging from 701 sf to 1,123 sf. Existing rents start at $435 per month and tick up to $650 per month, a value-add underwritten by an 8.77% pro forma cap rate.
A recent fire damaged four units, but the buyer picked up an $80,000 credit at the closing table to cover repairs, according to Hartnett. In addition, McMahan leveraged the deal with 80% loan-to-value financing from Jacksonville, FL-based EverBank.
Hartnett says upside will come from utilizing the in-place sub-metering instead of an all-bills paid rent. The plan also calls for pushing rents to market rate and more aggressive management from the new owner's in-house team, he says.
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