(Read more on the multifamily market.)
FORT WORTH-Now that the dust has settled on the deal, word is out that JMG Realty Inc. of Atlanta has bought the 210-unit Depot at the edge of the Downtown. The deal stipulates that the 95%-leased asset, bought for $24.67 million, remains as a rental.
JMG made the close with a $20.56-million, five-year loan from Charlotte, NC-based Wachovia Securities LLC in a package arranged by Holliday Fenoglio Fowler LP managing director Susan Hill in Houston. The borrower did an 80% loan to value to take the deed from Cotton Depot Associates LP, which has Dallas-based Carleton Realty Advisors Inc. as its general partner. Affiliate Carleton Residential Properties completed work on the 5.7-acre asset last year; Lincoln Property Co. in Dallas oversaw it until the sale.
JMG's drive to buy in Texas has a 180-unit complex in North Houston under contract, according to Kristi Kolbensvik, acquisitions director. "We look heavily in Texas. But cap rates are so low that we're having a difficult time finding anything," she tells GlobeSt.com. "If I could buy 10 properties in Texas, I'd be thrilled. But, I can't." Cap rates in Houston and Dallas/Fort Worth, in many cases, are sub-5%, she says.
JMG has amassed more than 5,000 units in the state, with its last three deals being in Texas. Kolbensvik says JMG, which leases and manages in house, has a five-year hold in mind for the Depot, which was 93% leased at sale time. The upside was getting an asset that was "coming out of lease-up," she explains. "It had heavy concessions." Since the purchase, concessions have been significantly reduced. "There is room to push rents because that market's so tight," she says. Rents average $1,200 per month.
The Depot's one- and two-bedroom units, averaging 894 sf and including detached garages, contain some recycled wood and artifacts from the St. Louis Southwestern Railway of Texas and Cotton Belt Railroad depot built in 1915. The complex's clubhouse and office is an adaptive reuse of the freight depot. "It's a cool, young urban feel," Kolbensvik explains, "that you don't see typically."
Kolbensvik says the original plan was to condo the gated development, situated within blocks of Sundance Square. A contract went down in August 2006 with that intent. A seller stipulation altered JMG's course "so we made it work as apartments," she says. "We're very glad to have it. That's not in the plan now, but would it have potential to [condo], yes."
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