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HOUSTON-Buchanan Street Partners of Newport Beach, CA, has gotten its first piece of Texas in a joint venture with a California investment group that has been buying multifamily product for the past year in the state. The JV paid about $5 million for 103 units near the Galleria and earmarked another $2.5 million for upgrades.

To close the deal for Greenway Court, Lynch Investments LLC of Oakland assumed a first-mortgage Fannie Mae loan and Buchanan Street put in 80% of the equity, GlobeSt.com is told. Lynch also will oversee the upgrades, which are set to begin and take a year to complete.

Randy Hall, Buchanan Street’s marketing director, says the complex’s existing rent of 83 cents per sf is about 20% below market. The plan is to upgrade, raise the rent and hold for five years as the asset appreciates in value, he says.

About $2,200 per unit, which average 981 sf, will be spent on apartment interiors while the property overall will get a new façade, upgrades to the parking garage, new HVAC systems, leasing office improvements and landscaping. Hall says the class B-minus complex will end up a solid class B plus when the work is done.

Seller Seattle-based Goodman Financial’s management group, Pinnacle Property Management, will remain as the day-to-day overseer for the 40-year-old complex, which is positioned a mile east of the Galleria mall.

Bob Halterbran of Pinnacle Realty in Seattle represented Goodman Financial. Tom Wilkinson of Houston-based KET Enterprises Inc. negotiated the terms for the buyer.

In the last year, Lynch acquired 1,500 units in Texas and has been scouring Houston and San Antonio for more. Buchanan Street is an equity investor that most often puts in $3 million to $16 million for acquisition, repositioning or new development for projects up to $75 million. Hall says Buchanan’s JV holdings currently total 2,000 apartments.

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