Total number of units: 444
2420 East Abram Street
Arlington, Texas 76010
Regal Commons Apartments, renamed to Equinox, comprised of 444 units, located in Arlington, Texas directly across from General Motors Arlington Assembly Plant which was undergoing a $1.3 billion expansion at time of purchase. Regal Commons was constructed in 1966 and was comprised of 25 two story buildings situated on almost 20 acres. The building exteriors featured brick and were in overall average condition. The property was not typical for its vintage in that the roofs were pitched, individual HVAC units and each unit had an individual hot water heater.
Knightvest was successful in contracting for the subject property on March 21, 2016. The property’s rental rates lagged behind market rent competition at time of purchase, current average effective rents were $673 ($0.87 PSF) with submarket average market rent of $822 ($1.05 PSF). The $149 market rent gap combined with average additional rent premiums of $75-$125 for upgrades provided an opportunity for achieving our targeted $1.23 PSF pro-forma rents within 5 years. The property had excellent value-add potential through completion of upgrading unit interiors, adding some washer and dryer connections in selected units, completing additional exterior improvements like paint and landscaping, along with implementing a new management team.
Panther and Knightvest closed the acquisition on 4/28/2016. The portfolio was 96% occupied at time of purchase. The business plan included extensive interior upgrades including new black appliances, countertop resurfacing, 6” baseboards, front door replacements, upgraded fixtures, lighting, cabinet fronts, and installing water saving devices. The exterior capital improvements included exterior paint, roof replacements as required, clubhouse remodel, pool renovations, landscaping improvements, electrical breaker replacement, replaced patio rails and balcony surrounds, and parking lot repairs. Knightvest’s Granite upgrades achieved up to a $350 premium over prior lease rate. This was a value-add project with an anticipated hold period of 3 to 5 years.
EXECUTION AND SALE
The business plan was successful with average rents increasing from $673 to $892 over the three-year hold period. The property sold in April 2019 surpassing economic projections.
This sale slightly exceeded our pro-forma projections providing a 1.69 multiple to Panther FW Investors and an annual average return on investment of approximately 22.68%.