WACO, TX-CrestMarc Woodstock Properties LLC has made its first purchase here, acquiring the 327-unit Sanger Oaks Apartments from Midland Loan Services of Overland Park, KS, in an all-cash transaction.
The class B property, which was 70% occupied at the time of closing, was in foreclosure and traded for an undisclosed amount. The previous owner, a local investor, had a $7 million note on the community, according to Chris Stutzman, a managing director with Transwestern’s Austin Multifamily Group. He and Jeff Rogers brokered the deal.
Local experts say distressed apartment assets are trading at prices ranging from $13,000 to $16,000 per unit. Using those metrics, Sanger Oaks sold at a price of $4.3 million to $5.2 million.
Unlike many other CMBS loans, which are in receivership and can be modified for new borrowers, Midland Loan Services had already foreclosed on Sanger Oaks, which meant that a new owner would have to find new debt or pay 100% cash.
“If the property had been in receivership, it would have opened up a much larger pool of buyers,” Stutzman tells GlobeSt., adding that he and Rogers marketed the property to a group of five buyers.
Sanger Oaks is the largest apartment complex in the Waco market. Formerly known as The Commons on Sanger Apartments, the apartment complex is located at 5000 Sanger Ave, just a few blocks from Valley Mills Drive, one of Waco’s main thoroughfares.
Developed in two phases in 1978 and 1979, the property contains 22 two-story buildings situated on 14 acres. It features a unit mix of 600-square-foot one-bedroom units and 800-square-foot two-bedroom units for a total of 218,600 square feet of living space. The property also contains an onsite management and leasing office, two swimming pools, a fitness facility and two tennis courts.
The previous owner lost the property to foreclosure in 2008, Stutzman says. “The property was severely distressed when the lender took it back – the occupancy had dropped into the 40% range,” he tells GlobeSt. “The property manager the lender put in place has been working steadily to increase occupancy.”
As of first quarter 2010, average occupancy for the Waco apartment market was 94.9% with the average rental rate of $586 per unit, according to Transwestern.
Stuzman says Dallas-based CrestMarc has extensive experience with property renovation and repositioning. Sanger Oaks is a true-value added opportunity, he notes, pointing to additional upside that can be generated through increased occupancy and increased rents once the property is updated.
CrestMarc has plans for both interior and exterior renovations for Sanger Oaks. Currently, 21 units in one building and half of a second building are un-inhabitable because of issues with the foundation. The new owner plans to bring those units back online as soon as possible.
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