Confidence in Market Leads to Recapitalization and Refinance

The Tuscan-inspired buildings create a charming community.

LEWISVILLE, TX—A 612-unit garden-style apartment community got an equity jolt in the form of a preferred investment. Advalurem Group completed the investment in Bella Madera at Lake Lewisville , located in one of the fastest growing areas of Dallas. The firm’s familiarity with the Dallas market after previously selling an asset in the same market and proactively seeking to add value to the venture enabled it to capitalize on this new opportunity. Advalurem initially completed a common equity investment with its partner, BRES , after the partnership purchased Bella Madera at Lake Lewisville in 2013. At the time of acquisition, the partnership assumed an existing first mortgage loan and secured preferred equity financing from a financial institution.  At the current market value of $65.6 million, the venture refinanced the property concurrently with the recapitalization of the partnership. Gabriel Pozo , principal and founder of Advalurem Group, tells GlobeSt.com: “Ultimately, we concluded, with our partner BRES, that the property was primed for recapitalization as opposed to sale. This decision was due in large part to our confidence in the long-term growth prospects of the Dallas-Fort Worth area.” As part of the recapitalization, Advalurem Group funded the balance necessary to pay off the preferred equity holder. The recapitalization of the partnership effectively increased Advalurem’s ownership stake and voting rights in the management of the property. “Not many investment managers are willing to commit to a transaction of this size, let alone invest at different points of the equity capital structure,” adds Fred Scott , principal of Advalurem Group. Built in 2009, Bella Madera at Lake Lewisville proves to be a desirable residence with an occupancy of 96%. Tucked away from Dallas city living, the complex is still only moments from major business districts including Legacy and Las Colinas, retail and recreation. “Advalurem was the logical capital partner for this investment as we were already in the common equity, we had proposed the recapitalization to the venture, and the transaction size fit well with our mid-market strategy,” said Pozo.