FORT WORTH-On behalf of clients, Wells Asset Management Inc. recently closed on three multifamily properties in different transactions in the metroplex. The three assets are the local 140-unit Westwind Apartments, the 72-unit Rosegate in Garland, TX and the 117-unit Foxhollow Apartments in Dallas.
According to Wells' senior vice president and principal Robert D. Aiello, Westwind Apartments, at 4300 Old Benbrook Rd., was sold by an out-of-state seller to a California buyer in a pure value-add play. Aiello noted that Southwest Securities financed the transaction with help from a three-year, sub-4% interest loan, with plans to obtain more permanent financing once improvements have been made. "The new owner will put approximately $450,000 in rehab including new appliances and flooring," Aiello says. "He wants to upgrade a 1982 property to 1998."
The same buyer also acquired Rosegate at 4221 Rosehill Rd. from Millennium Partners. The transaction was helped with a Fannie May, 10-year, 30-year amortization loan. The new owner also plans $400,000 in capital expenditures for the property.
A different California group, in the meantime, came in to buy the 1980s Foxhollow at 9450 Royal Lane from a Hawaiian seller. Aiello says the new owner is investing approximately $1.2 million to rehab the property.
All three assets have some upside component to them, and Aiello says that such properties, once the province of private investors and smaller companies, are attracting the interest of some of the institutional big guns.
"Value-add is the new hot term when it comes to multifamily in the metroplex," he tells GlobeSt.com. "Back in the 1990s, when the larger investors were looking for multifamily, they wanted mid-80s construction and newer, with 200 to 250 units, at the right price." These days, however, the larger investors are highly interested in the potential of value-add. "It's like piranhas going after the same piece of meat in the water," says Aiello, explaining why some of the newer properties aren't attracting quite as much investor interest. "The investors can't make sense of a lot of the new stuff that's being built. They can't get the yield."
This isn't to say, of course, that institutional investors and pension funds aren't still liking the new stuff. Still, "I'm talking to brokers who represent funds of $300 million and $400 million," Aiello notes. "They can't find the right deals, and they're turning to properties that can provide better yield after rehab."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
