Friday, March 21, 2008

Concierge Asset Begins Push With 656- Unit Buy

A Concierge Asset Management LLC-affiliated partnership has jumped into a value-add play in East Dallas, acquiring the 656-unit Honey Creek Apartments for slightly less than its $19.5-million assessment. The acquisition is tag teamed with the firm's decision to open a local office.
Concierge Asset Management is and will continue to be headquartered in Tiburon, CA and Houston so the second Texas location is a strong show of confidence in the marketplace and solidified by its decision to buy the 22.4-acre Honey Creek Apartments at 11611 Ferguson Rd., according to CEO Ted Kerr. "We are very bullish on the combined metropolitan area of Dallas/Fort Worth," he says, "and we believe Honey Creek's submarket is well positioned for economic growth."
Built in 1984, Honey Creek was 90% leased at sale time. The 37-building mix of one- and two-bedroom apartments in several floor plans, ranging from 518 sf to 953 sf, is situated at the intersection of Interstate 635 and Ferguson Road.
Kerr says the value-add play calls for a renovation to raise the complex up a notch to class B-plus standards and seed a rent hike for the expected three- to five-year hold. Existing rents go from $449 to $636 per month. He says the post-renovation goal is 5% annual rent growth.
According to Dallas County tax records, the seller is a limited partnership with ties to Tampa-based MuniMae Portfolio Services LLC. Kerr says the free-and-clear sale was closed with a five-year loan from Freddie Mac at a 5.6% fixed-rate interest, which was arranged by Charlie Geiss, Concierge's director of equity and investment finance.
According to Kerr, the Concierge team repeatedly asked MuniMae about the asset, which hit the market about one year ago. "The seller knew we were serious about the property. We had demonstrated a strong interest in buying this particular property," he explains. "And, we had a reputation for being a reliable buyer and had done our homework."
Kerr says there was a requirement for a year-end closing, which worked in Concierge's favor with its track record as the linchpin for the MuniMae recommendation. The seller's broker, Paul Harris, managing partner in Dallas for Chicago-based Moran & Co., says in a press release that Concierge wasn't the highest offer, but "we knew their reputation and based on our recommendation, they were selected as the buyer." Jenny Gillaspy, a Concierge director of acquisitions in Dallas, led negotiations, with COO Myra Rega in charge of due diligence.
Concierge's Dallas office has opened on the fourth floor of 9400 Central Expressway. Michael Wurst, general counsel and director of capital market investments, heads up the four-member office. More personnel and more acquisitions will be added as the year plays out. The investment group owns two other multifamily properties in Dallas/Fort Worth.
Kerr says Concierge is armed with $400 million of debt and equity to deploy this year for its strategy to build a workforce and affordable housing portfolio. "There is no specific goal for Dallas, but we are looking for good opportunities," he says. "We are very interested in some properties and are negotiating to purchase them, but they're not under contract." - Globe Street