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Big Housing Portfolio in Dallas-Fort Worth Sells to Single Buyer

Winning Bidder Exponential Property Group Snaps Up Entire 2,000+ unit Apartment Community Portfolio
July 5, 2018
A North Texas investment firm was the winning bidder for a 2,000-plus-unit apartment portfolio amid a strong showing of investors with an appetite for housing in the fast-growing region of Dallas-Fort Worth.

Grapevine-based Exponential Property Group has acquired the eight-property, 2,048-unit North Texas portfolio. The communities sold after a 30-year hold by the previous ownership group. Terms of the acquisition were undisclosed.

"The apartment communities had always been solid performers and were the last of the seller's portfolio in Texas," Drew Kile, senior director in Institutional Property Advisors, a division of Marcus & Millichap (NYSE: MMI), told CoStar News. "The partners decided it was the right time to divest the portfolio after owning it for so long."

The eight properties were built between 1977 and 1985 and had been held by a single owner with an in-house management team and little deferred maintenance. The new ownership group could easily upgrade the apartment communities with some new landscaping and interior upgrades to push rents, Kile said.

Kile, along with Will Balthrope, Joey Tumminello, Al Silva and Ford Braly, represented the seller, a private investor based in Canada. The team also procured the buyer, Exponential Property Group, after 226 investment groups initially signed confidentiality agreements to review details on the properties.

"While there were a lot of people that were tire kickers, we had a very strong turnout of buyers," Kile told CoStar News. "We were even a little surprised the majority of those buyers offered on the entire portfolio rather than individual properties."

Ultimately, the deal went to a buyer looking to acquire the entire portfolio and keep the existing management team in place on the properties. The properties include:

  • Pecan Knoll, a 358-unit apartment community at 1051 E. Centerville Road in Garland;
  • Broadway Manor, a 134-unit community at 2830 Dairy Road in Garland;
  • Quail Ridge, a 292-unit property at 1919 W. Tarrant Road in Grand Prairie;
  • Cedar Point of Arlington, a 272-unit community at 2020 Cedar Point Drive in Arlington;
  • The Woodlands, a 346-unit property at 7040 John T. White Road in Fort Worth;
  • Marine Creek, a 248-unit apartment community at 4500 Marine Creek Parkway in Fort Worth;
  • Normandale Manor, a 122-unit property at 8700 N. Normandale St. in Fort Worth;
  • Emerald Hills, a 276-unit community at 8950 N. Normandale St. in Fort Worth

    Investors still have an appetite to acquire apartment communities as an alternative investment option, Kile said. And workforce housing is in especially high demand, he added.

    "You can't build workforce housing for this money in North Texas and not everyone is moving into brand-new apartments," Kile said. "There are also a lot of mid- to lower tier jobs being added to the region and we are still seeing a lot of continued investor interest in the workforce housing play."

    The demand highlights the continued trend of Class B and Class C apartment communities often outperforming their shinier Class A counterparts with high occupancy rates and good returns, he said.

    "The value-add properties continue to work, especially later in the cycle as interest rates turn up a bit," Kile added. "There's a bit of protected airspace around these properties as we move forward in the economic cycle."

    Please refer to CoStar Sales Comp #4347390. This transaction is being researched to confirm additional details.

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