Secondary Markets Have Room to Run

DALLAS—Many believe properties in secondary/suburban markets have room to run and can be acquired at well below replacement cost. Such was the case for a recent group of multifamily properties, with half of those acquired outside the DFW metro.

The six multifamily properties have a total of 656 units and sold for approximately $41 million. The properties are Country Place with 172 units in Abilene, TX, Riverwood with 112 units in Temple, TX, La Vita with 162 units in Dallas, The Carlton with 108 units in Fort Worth, Legends of Lindale with 88 units in Lindale, TX and Fair Oaks with 14 units in Dallas.

The Dallas-based multifamily investment sales team of Marcus & Millichap led by Nick Fluellen and Bard Hoover were the brokers on the transactions. Fluellen, senior managing director investments, and Hoover, first vice president investments, represented the sellers and procured the buyers for all of the transactions.

“These six transactions display an evolving investment trend,” says Fluellen. “As the metroplex's strong historical performance continues to attract developers and investors, more and more buyers are pursuing opportunities in smaller markets in every direction around Dallas and Fort Worth.”

Matt Aslan, Evan Burke and Sean Scott, associates, provided additional representation for the Country Place, Riverwood and Legends of Lindale transactions. Jake Roberts, senior managing director capital markets with IPA Capital Markets, arranged financing for the Country Place and Riverwood acquisitions.

“Investors are intrigued by secondary and tertiary markets due to limited competition, lack of new construction and significant potential for value creation,” Fluellen tells GlobeSt.com. “The fundamentals are strong throughout north Texas, and cap rates and going-in yields are very attractive in these markets.”

Each asset presented a distinct opportunity for upside, adds Hoover.

“While all the properties were stabilized at the time of sale, there were also strategic openings for capital injection and revenue enhancement,” he says. “Each buyer has an aggressive plan to improve the exterior and community amenities while also upgrading interiors to compete with the market leaders in each location.”

DALLAS—Many believe properties in secondary/suburban markets have room to run and can be acquired at well below replacement cost. Such was the case for a recent group of multifamily properties, with half of those acquired outside the DFW metro.

The six multifamily properties have a total of 656 units and sold for approximately $41 million. The properties are Country Place with 172 units in Abilene, TX, Riverwood with 112 units in Temple, TX, La Vita with 162 units in Dallas, The Carlton with 108 units in Fort Worth, Legends of Lindale with 88 units in Lindale, TX and Fair Oaks with 14 units in Dallas.

The Dallas-based multifamily investment sales team of Marcus & Millichap led by Nick Fluellen and Bard Hoover were the brokers on the transactions. Fluellen, senior managing director investments, and Hoover, first vice president investments, represented the sellers and procured the buyers for all of the transactions.

“These six transactions display an evolving investment trend,” says Fluellen. “As the metroplex's strong historical performance continues to attract developers and investors, more and more buyers are pursuing opportunities in smaller markets in every direction around Dallas and Fort Worth.”

Matt Aslan, Evan Burke and Sean Scott, associates, provided additional representation for the Country Place, Riverwood and Legends of Lindale transactions. Jake Roberts, senior managing director capital markets with IPA Capital Markets, arranged financing for the Country Place and Riverwood acquisitions.

“Investors are intrigued by secondary and tertiary markets due to limited competition, lack of new construction and significant potential for value creation,” Fluellen tells GlobeSt.com. “The fundamentals are strong throughout north Texas, and cap rates and going-in yields are very attractive in these markets.”

Each asset presented a distinct opportunity for upside, adds Hoover.

“While all the properties were stabilized at the time of sale, there were also strategic openings for capital injection and revenue enhancement,” he says. “Each buyer has an aggressive plan to improve the exterior and community amenities while also upgrading interiors to compete with the market leaders in each location.”