A Washington-state multifamily investor, tapping into the strong demand for product, has sold the 72-unit Villa Encanto Apartments in northwest Dallas to a local buyer in an all-cash off-market transaction.
The 98%-leased complex sits on nearly 1.6 acres at 2850 Clydedale Dr. in the Bachman Lake submarket. Sam Pettigrew, National Apartment Advisors' managing partner in Dallas, represented the seller, OCF LLC, in a direct deal with Dallas Villa Encanto Apartments LLC.
The Bachman Lake neighborhood is a mix of multi- and single-family properties, favored by families because it's close to schools, retail, restaurants and several freeways. Villa Encanto has consistently maintained high occupancy for several years. The six-building complex, built in 1974, features 32 efficiencies, 29 one-bedroom and 11 two-bedroom units, averaging 631 sf. Rents range from $635 to $1,030 for all bills-paid apartments.
"It's a great time to be a seller and OCF recognized that conditions were right to exit the market," Pettigrew says. "They had made a good return in the two years they've owned it and were ready to cash out and re-invest in their home state."
The new owner is planning to spend about $300,000 on property improvements, focusing on roof replacements, landscaping and other exterior enhancements. Unit interiors too will be upgraded.
Villa Encanto is located close to Interstates 35 and 635, TX 114 and 183 and Northwest Highway, putting it within a short drive of the Dallas CBD, two major airports and leading employment centers.
Villa Encanto is Pettigrew's fifth off-market transaction this year. "NAA does a lot of off-market deals in Houston. DFW sellers are becoming more open to off-market offers than they have been in the past," Pettigrew says. "While listings remain the more popular approach, there definitely has been an uptick this year in off-market closings." The NAA partner has two more off-market sales, totaling 557 units, slated to close in Greater Dallas before summer ends. To date this year, his transaction volume is $62 million and 1,041 units. Although transactions have slowed nationwide, Pettigrew says "it's the right time to sell in Dallas/Fort Worth with demand so strong from renters and buyers alike."
According to market reports, Dallas/Fort Worth multifamily rents rose 1.8% in the second quarter and are up 3.6% year to date. Occupancy is nearly 96%, a byproduct of the region's unprecedented job growth. With the DFW rental market so tight, multifamily developers are building fast and furiously to meet demand – more than 50,000 units currently are under construction, second only to New York. The market has absorbed 16,765 units since January.
The National Multifamily Housing Council and the National Apartment Association credit the property sector's strength to Millennials preferring to rent instead of buy and the increase in immigrants. Further fueling the market are seniors exiting homeownership and a growing number of childless couples. According to the joint study, the nation will need to add 4.6 million new units by 2030 to meet projected demand.
"This kind of market provides good opportunities for small and medium-size investors to trade up," Pettigrew says.
