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DALLAS-A California investment group, backed by hedge funds and money managers, has marched into Texas after a long search for its first trophies, spending nearly $109.7 million for 1,086 units in Carrollton and Plano.

Scott McWhorter, principal of Virtu Investments, tells GlobeSt.com that the group got the upper hand with the double listing–the Mansions at Ridgeview County Club and Mansions at Coyote Ridge–by placing a full-price offer on the first day that they hit the market and going hard 10 days later. “These are the first A-plus properties that we’ve bought,” McWhorter says. The principal of the eight-year-old, San Francisco-based company says another $300 million to $500 million is available for Dallas/Fort Worth acquisitions if the right deals come along.

The just-bought, golf course-fronting properties are the 528-unit Mansions at Coyote Ridge at 4253 Hunt Dr. in Carrollton and 548-unit Mansions at Ridgeview Country Club at 9601 Custer Rd. in Plano. Western Rim Investment Advisors Inc. of Dallas developed both townhome-style complexes in 1999. Coyote Ridge was 94.3% leased at sale time and Ridgeview was resting at 92.1%.

McWhorter says he was in town to tour other properties with Virtu’s Southwest US acquisitions director, Marc Olivieri, and Marcus & Millichap’s Norman Eastwood when he saw the Mansions listing. Coyote Ridge was the more expensive of the two, McWhorter says. Its units average 1,323 sf, a mix of one-, two- and three-bedrooms. Ridgeview’s units, which include a four-bedroom design, average 1,147 sf. Both sport rents ranging from $800 to $1,800 per month. VPM Management, a Virtu affiliate, and Greystar Management Co. of Houston will oversee the properties.

McWhorter says the upside will come from a concessions burn-off, which most often is one month of free rent on a one-year lease. “Both are pushing the market [in terms of rent],” he says so the gain for now will come from the burn-off and filling the empty units. “We felt like we were buying substantially back of what it would cost to rebuild them.” But, the dealmakers also included school district reputations, unit sizes and the quality of the assets, he says, adding Virtu has up to six months to remove the Mansions brand from the properties’ signs.

McWhorter says Virtu could have assumed loans with Metropolitan Life Insurance Co. and Freddie Mac, but opted for new financing because better terms were available in today’s market. Atlanta-based Column Financial Inc. cleared a 10-year loan at a 5.37% fixed-rate interest, with the initial five years as interest only. Coyote Ridge, accounting for about $57 million of the deal, required a mezz piece, which was supplied by LEM Mezzanine LLC of Philadelphia. Mona Carlton in Holliday Fenoglio Fowler LP’s Dallas office and Peter Slaugh with Steelhead Capital Inc. of San Francisco arranged the financing.

Historically, Virtu predominately has been a class C multifamily buyer, amassing about 6,000 units in a portfolio blended with some class B and class A-minus product in its home state, Seattle, Tacoma, WA, San Antonio, Oklahoma City and Tulsa, OK. Prior to the Dallas acquisition, the portfolio, including a few office buildings and one hotel, was valued at $400 million.

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