$7M-Plus Buys, Rehabs 312 Units in Hot Pocket

DALLAS-Eureka Holdings of Dallas has secured an interest-only, two-year loan for more than $7 million to buy and rehab a 312-unit complex in South Dallas, a class C property with upside potential on the fringes of a neighborhood that’s home to one of the ritziest golf courses in town.

The financing represents 95% of the acquisition and renovation cost, pegged at $1 million, for the Mountain Valley Apartments at 1205 S. Walton Walker Blvd., William E. Cave, vice president of PW Funding Inc.’s Dallas office, tells GlobeSt.com. Rehab work has just started at the complex, which had eight units damaged in a July 2001 fire. Built in 1969, the 19-building, garden-style complex is earmarked for interior and exterior work, with each unit in line for about $5,000 in upgrades.

Patrick J. McFarland, vice president of Churchill Capital Co. LLC in Dallas, brokered the financing for buyer, Eureka Holdings of Dallas. The fire-damaged building has been razed, but other units have fallen into disrepair and will be brought back on line by the new owner, says McFarland. Devonshire Management of Dallas has been awarded the third-party contract.

Eureka’s acquisitions director Harris Block brokered the buy with seller Paul Krupp of Boston. McFarland says the new owner has yet to decide if the asset will be a long-term hold. The plan, for now, is to repair and reposition to boost occupancy into the mid-90% range, more in keeping with the submarket average, he says.

The average unit is 971 sf, renting for 58 cents per sf. That, however, isn’t the only upside that the investment group is sure to realize from the 17.3-acre holding. It is situated right across Interstate 30 from the Dallas National Golf Club, where the initiation fee is $150,000, and nestled in a revitalization area that’s been a development hotspot this year. The upside, Cave explains, played a key role in the decision to stake the buyer to the claim.

Eureka Holdings was under a 35-day time constraint to close the deal since there was a back-up buyer waiting in the wings, Cave confides. He arranged the loan through American Mortgage Acceptance Co.’s Acquisition Bridge Program. The Mountain Valley loan has a floating interest rate of 4.75% over 30-day LIBOR and one six-month extension beyond the two-year maturity. It launched at 6.17% interest.