- Web: telstarapartments
- Acquisition Date: July 2006
- Location: Dallas, TX - USA
- Scale: 100 Apartment Units in 3 Buildings – XX,XXX ft2
- Structure: Syndicated Single-Purpose LLC
- Return: Sold 2014 @ 50% above peak 2007 value
When lemons start flying everywhere, you need to get good at making and selling lemonade. This project is about one of the few apartments in LaSalle’s 2006 CMBS Loan Pool that didn’t go back to the bank.
In 2006 with top-tier market rental houses getting way overpriced versus their rents, trading from houses into sub-$25k/door 8-cap apartments seemed like a good idea. It wasn’t. By the time we finished rehabbing this one, the bottom fell out of the global financial world. Class C apartment dwellers lost their jobs, which to owners meant higher vacancy, lower market rents, higher concessions, higher turnover costs, and generally lousy financials – together with values whacked in half. But lending had ceased immediately which prevented selling at any price. And we had a whacky 30 year loan that should have never been underwritten, from a failed lender, sliced and diced into a loan pool that mostly failed. The lemons were flying…
We learned to make lemonade! After firing 4 management companies while learning from their strengths and weaknesses, we found one we liked and we keep learning together. Multifamily apartment management is a very challenging business with many moving parts and staff specialties. It takes tight systems and creative problem solving.
By watching every P&L and capex line like a hawk, ensuring high-performance staff, and staying hands-on with regular inspection visits, we kept the property performing and in great shape until the DFW apartment market came back (it is very cyclical). Many of our competitors didn’t.
Following several quarters of near 100% occupancy, market pricing appeared inflated in 2014, so we sold – for over 50% more per-door than we paid.