DALLAS-In back-to-back closings, the Bascom Group has set up two value-add plays in Irving and Dallas. The dynamics of the double run translate into an $18-million all-in investment, plus or minus, for acquisition and renovation.

The Irvine, CA-based investment group and equity backer Pacific Coast Capital Partners LLC of Los Angeles have scooped up the 206-unit Oak Tree Apartments at 2877 W. Walnut Hill Lane in Irving and 192-unit Charleston Apartments at 5616 Spring Valley Rd. in North Dallas. Both complexes will be re-branded with new names as part of their three-year repositioning plans.

Bascom’s Texas shop often buys in bulk, but the locations were the selling points for the pair of one-offs. The 78%-leased Oak Tree is situated at the edge of Las Colinas and less than two miles from Dallas/Fort Worth International Airport. The 88%-leased Charleston is less than one mile from the Galleria. “We got some great buys and we want to leverage the value-add to drive rents,” James Dargenio, the buyer’s senior analyst in Dallas, tells GlobeSt.com.

Ryan M. Akins, Bascom’s regional director in Dallas, sourced both deals. Jerry Hess, acquisitions manager in Texas, did due diligence and the closing for Oak Tree while Dargenio worked out the Charleston purchase. Pacific Coast’s Bill Lindsay and Jed Lassere were part of the bargaining team.

The class C-plus Oak Tree was listed for $8.2 million by Dirk Goris, senior vice president for CB Richard Ellis in Dallas, for 14-year owner, the Fifteen Group LLC of Miami Beach, FL. Hess says the close was made with three-year financing at a floating rate interest and 80% loan to cost from Newark-based Prudential Mortgage Corp. Pru’s Christopher Holden and Jaime Zadra arranged financing.

Hess says Oak Tree will undergo $2.5 million of renovations, starting with deferred maintenance like drainage and roofs. The renovation will include a new playground and adding a soccer court and picnic areas and upgrades to unit interiors in the 20-building complex, built in 1972 on 11.2 acres. Commercial Services Inc.’s Dallas team will start the work within 12 weeks.

“It’s a three-year business plan so we want to address deferred maintenance and do a good value-add,” Hess says, “and stabilize and sell. The upside is in both occupancy and rents.”

Oak Tree’s concessions equal about 10% of the in-place rents for the one-, two- and three-bedroom units, which average 1,113 sf and bring in a median rent of $753 per month. He says the pro forma calls for a 6% rent hike after the renovation. “It’s a very good find,” he says.

Hess is scouting for more buys in the Irving submarket. “It’s definitely an area we’ve been interested in,” he says.

Dargenio says the value-add for the 16-building Charleston Apartments, built in 1978 on eight acres, will cost about $9,000 per unit. United Renovations of Dallas will do the work.

The one- and two-bedroom apartments average 765 sf. The average monthly rent is $598 per unit. Dargenio says the Charleston’s concessions are about 13% of the market rent. “The location, nice floor plans–we could see if we invested the money, mostly in value-add, we could burn concessions and push rents to market,” he says.

Transwestern vice presidents Armand Charbonneau and Mark Freeman brought the deal to Bascom. The seller is Trivest Residential LLC of Dallas. Capmark Finance Inc. provided financing in a three-year vehicle with a floating-rate interest and 80% loan to cost. Based on market comps, class B-minus complexes in the area trade for roughly $30,000 per unit.

The two pickups bump the Bascom-Pacific Coast JV to 1,910 units in four properties in Texas. In all, Bascom now owns more than 8,200 units in the region.

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