Oak Cliff Portfolio Sells in 23 Days

Seven offers were on the table, mostly local investors. "We chose this buyer because he was able to perform in 23 days from the letter of intent," says Todd Franks, executive vice president for Dallas-based Cantrell Co., who teamed with senior vice president Sam Pettigrew for the disposition by Kam LLC of Encinitas, CA. The exchange, sporting an 8.3% cap rate, came within 92% of the marketed price.

Known locally as the Rainbow Properties, the portfolio consists of the 34-unit La Jolla Apartments at 321 E. 8th St.; 26-unit Huntington Terrace at 336 Lancaster Ave.; 24-unit El Ricardo Apartments 409 E. 9th St.; and 20-unit Casa Bonita at 308 E. 8th St. Franks says the buyer insisted on including the 32-unit River Oaks, an immediate neighbor that was in the process of being renovated.

The cache of class C complexes spans roughly three acres, with Huntington Terrace in the Oak Cliff tax-increment financing district and the others right on its doorstep. The mix sits within blocks of the Bishop Arts District, a revitalized neighborhood with an eclectic shopping mix, and Methodist Medical Center. "They are good locations," Pettigrew stresses.

The new owner's going-forward plan is to "keep as is and cash flow the properties," Pettigrew adds, pointing out upside lies in future land value. "I think he's working the land."

J. Blue Properties of Dallas held onto the management reins for the 92.5%-leased portfolio, all early 1960s-era construction and a weighted mix of one-bedroom apartments. Units average 538 sf; the all bills-paid rents average $581 per month.

The brokers say the five complexes will need to be renovated, but they aren't privy to the extent of the new owner's plan for a just-bought block that sits across the street from some brand-new units. According to the marketing flyer, the financials included a $2.89-million recourse loan at a 6% fixed-rate interest, which the dealmakers say passed to the buyer in the 23-day spin.

Franks says Kam downsized its ask for the quick close. "The terms motivated him," he says. "It was a combination of that and the opportunities he had in California that he was able to take less than he wanted. The timing was right."