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DALLAS-Paying slightly less than $30,000 per unit, a Los Angeles-area partnership has taken control of 116 units in two complexes from a local investor. The class C complexes, positioned within blocks of each other, were 97% leased when they changed hands.

The immediate upside could come from rent hikes as leases roll in the 68-unit Castle Place Apartments at 3627 Almazon Dr. and 48-unit Towne Place Apartments at 3434 Hidalgo Dr., Christopher Deuillet, a Dallas senior associate and associate director of the national multi-housing group for Marcus & Millichap Real Estate Investment Brokerage Co., tells GlobeSt.com. The one- and two-bedroom units average 650 sf, renting as all-bills paid for an average of 75 cents per sf. The submarket rate is 85 cents per sf, he says.

The portfolio buy was on the market four months, picking up 11 offers with the 1031 exchange buyer from California lobbing the highest bid, according to Deuillet, who says the partnership recently used some funds from California single-family housing sales to acquire another small multifamily property, the Acacia Apartments in Dallas.

Deuillet says Castle Place is sub-metered to build in additional future upside. “They locked in a good rate with a utility broker on Acacia and they’re trying to do the same with these,” he says, explaining increasing utility costs are “becoming more of a discussion topic now” at the bargaining table.

The deal closed at 99.6% of the list price and 9.5% cap rate, according to Deuillet. The buyers, represented by Jim Dutka with Sanctuary Properties of Los Angeles, secured 80% loan-to-value financing, with a 6.6% fixed-rate interest, from LaSalle Bank in Chicago, Deuillet says. The seller bought the complexes, positioned on a combined three acres, in 1999.

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