Amid Market Upheaval, Multifamily Portfolio Finds Buyer

DALLAS—Vineyards at the Ranch I & II and Beacon Hill represent a combined 1,656-unit community spread across 38.62 acres in the highly transactional Northeast Dallas submarket. Both properties benefit from access to Interstate 635 (260,000 vehicles per day) and Interstate 75 or “High Five” interchange, and are adjacent to the LBJ/Skillman DART station.

NorthMarq’s Dallas investment sales team of managing director Taylor Snoddy, senior vice president Philip Wiegand and senior vice president James Roberts represented both buyer and seller on the Vineyards at the Ranch I & II transaction and also brokered the Beacon Hill transaction. DP Partners LTD PS was the seller of Beacon Hill Apartments and Stone Ranch Owner/Stone Ranch Owners Two LLC was the seller of Vineyards at the Ranch. NorthMarq also arranged the sale and financing for WindMass Capital Partners.

The buyer has the ability to capitalize on planned upgrades to units and common areas in order to compete within a submarket already benefiting from these types of renovations, says Snoddy.

“We want to renovate and are already starting to work with the neighbors around us to make the area better,” said Mitchell Voss, founder and CEO of WindMass Capital Partners. “We view this as an opportunity to do something like the Village. Having so many units, we can have the best personnel and staff on site.”

NorthMarq’s Dallas debt/equity team of senior vice president/managing director Stephen Whitehead, vice president William Hancock and senior vice president Lauren Bresky secured acquisition financing for the property. The bridge loan was structured with a great amount of flexibility to help the sponsor achieve his business plan. Not only was the NorthMarq team able to get the sponsor pre-payment flexibility, but it was also able to fund 100% of the sponsor’s rehab cost and structure around a collapsible ground lease.

“In an extremely turbulent time in the market, we were able to deliver a deal that closed as submitted. This surety of execution is what has given WindMass the confidence to work with NorthMarq on both their debt and equity needs,” said Hancock.

Snoddy concurs that the transaction window was less than ideal but the parties pulled together to finalize the closing details.

“Interestingly enough, despite the closing occurring in the midst of 10-year economic decline, volatility in the stock market and the uncertainty of COVID, both the buyer and the seller remained calm in their pursuit of this closing,” Snoddy tells GlobeSt.com. “I think they felt that the team had their backs, since we brought the parties together and arranged every component of the capital stack. It has been a very unsettling few weeks for all parts of the financial markets, and with all of the tension and uncertainty swirling, any one of the sources could have gotten cold feet. But with the equity source convinced of the long-term potential and the lender aware of solid rent roles with tenants in many employment sectors, the sale continued to make sense from every aspect.”

The ensuing challenges were resolved to make the deal happen, says Hancock.

“Part of the challenge was that the borrower’s debt package was rooted in a LIBOR floor that was substantially higher than the current one-month LIBOR rate,” Hancock tells GlobeSt.com. “We leveraged our relationship with the lender to work out other economic and legal deal points to offset the borrower not getting to take advantage of the lower LIBOR rate, while retaining the closing date. We also arranged the equity funding into title a few days before closing to ensure that the loan could close on an escalated schedule.”

The properties are located in the highly sought-after Northeast Dallas submarket with a 15% population growth within a one-mile radius since 2010. The surrounding demographics have an average household income above $75,000 within three miles of the properties and home values in the immediate vicinity average more than $300,000.

During the last five years, the submarket has recorded an average annual rent growth of 5.5%, ranking fifth among the Dallas-Plano-Irving MSA, while maintaining an occupancy level of more than 93%. This strong growth can be attributed to proximity to some of the area’s top employment drivers including Texas Instruments Corporate Headquarters, Texas Health Presbyterian Hospital, Town East Mall, North Park Mall, the Telecom Corridor, Platinum Office Corridor and the CityLine project.

The area has a workforce of more than 225,000 employees and is expected to keep growing. Last year, DFW led the nation in total jobs added, creating 127,600 new jobs throughout the metro. Additionally, the properties feed into the highly coveted Richardson ISD, which attracts a family-oriented tenant base that benefits from Thurgood Marshall Elementary School, Lake Highlands High School and Richland Community College. The Northeast Dallas submarket remains one of the healthiest submarkets due to these contributing factors.

“The portfolio has tremendous upside in what is already a high rent growth submarket with competitive advantage due to the size of the deal,” said Wiegand.