Weeks after buying a nearly 300-unit complex within a mile of its headquarters, a Henrico-based real estate investment and operating firm looked to the Lone Star State for the latest addition to its apartment portfolio.
McCann Realty Partners, along with joint venture partner The Carlyle Group, closed last month on a 165-unit apartment complex in Texas, where it has at least 17 other properties acquired or in development.
This latest property, called Marquis on Cedar Springs, is located at 3604 Cedar Springs Road in Dallas. The property, a four-story midrise built in 2001, will be rebranded Radius Turtle Creek, according to an announcement.
The deal closed Aug. 1. Terms were not disclosed. Online property records did not reflect the ownership change as of Wednesday. The property was acquired from a California-based limited partnership that purchased the property in 2006.
A 2016 assessment valued the property at $25 million, according to Dallas records.
McCann president Matt Akin said the property’s location and newer product were appealing to the company, which recently acquired the 294-unit Hickory Creek apartments in Henrico for $28.55 million. McCann worked on the Dallas buy with The Carlyle Group, a Washington, D.C.-based asset management company.
Where Hickory Creek is a 32-year-old complex within a mile of McCann’s Henrico offices, Akin noted the Dallas property’s newer construction presented a different type of investment opportunity.
“It’s a lot different than Hickory Creek. They’re completely different kinds of assets. But they both have opportunities for value-add,” Akin said.
“It’s an expensive product to build in today’s marketplace,” he said. “We were able to acquire it at a cost that competes very well with new product and go in and update the units with modern finishes and improve the amenities, to bring those in line with today’s new product and compete with the new product at a competitive basis.”
While Hickory Creek is requiring more involved renovations due to years of what Akin described as deferred maintenance, he said the Dallas apartments would require less renovation expense on top of the purchase price. He declined to put a number on the renovation cost for either project.
“The whole pitch is: buy below replacement cost, renovate, keep your cost basis below construction, and you’ve got a property with similar rents without taking lease-up and construction cost risk,” Akin said.
In addition to McCann’s purchase of Hickory Creek, two local apartment complexes totaling 524 units were purchased in recent weeks by a California firm: The Champions Club, which went for $23.32 million, and Park West End, which was purchased for $28.5 million.