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IRVING, TX-Buchanan Street Partners has married its equity to $25 million of senior financing in a first-time partnership with Greystar Real Estate Partners LLC to acquire the 504-unit Shadows of Cottonwood. The 92%-leased complex will be paced through $5 million of upgrades.

The JV’s purchase of the 34-building complex at 3950 N. Story Rd. is being packaged as a three- to five-year hold, according to Kristin Panehal, senior vice president of Newport Beach, CA-based Buchanan Street. She tells GlobeSt.com that the JV secured a five-year loan from Freddie Mac through Deutsche Bank to take the deed from an affiliate of Fairfield Residential LLC in San Diego.

Panehal says she’d been evaluating deals in the Charleston, SC-based Greystar’s pipeline since January. “This was the first one that had enough value-add component,” she explains. “It was the first deal that really fit what we were looking for.” With the deal done, the JV is sizing up a property in Colorado.

Panehal says Greystar has bids in hand to select contracts for the exterior upgrades, which are projected to take six to nine months to complete. Interiors will be retooled as units turn. The three-story buildings, developed in 1983 on a 10.6-acre tract, has one-, two- and three-bedroom units averaging 845 sf. In-place rents average $720 per month, with concession burn-off adding promise of additional upside after the extensive renovation is done.

“Anytime you put that significant amount of capital into a property, you expect to get a return on the capital,” Panehal says. How much or when rents will start to climb are being assessed. But, she readily points out that “the market is improving and the expectation is concessions will get removed in the marketplace.”

The plan is to bump the Shadows of Cottonwood to class A status from class B. Greystar’s new property to manage and lease is situated in the Las Colinas submarket. “The fundamentals of multifamily are still strong in Dallas, particularly in Las Colinas,” Kevin Kaberna, Greystar’s investment principal, says in a press release. “We were excited to find such a well-located asset at a deep discount to replacement costs.”

Paul Harris, partner in Dallas for Chicago-based Moran & Co., and Thad Wetterau, director, brokered the sale. Panehal says the deal took about 90 days to cycle through all channels.

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