Transwestern, S2 Capital Sell DFW Community

The owners renovated and repositioned The Morgan, located in the suburb of Bedford, Texas, before its disposition.
The Morgan. Image courtesy of Transwestern Investment Group

Two years after acquiring The Morgan, a 464-unit multifamily community in the Dallas-Fort Worth market, Transwestern Investment Group and S2 Capital LLC has sold the property to Pauls Corp., after renovating and repositioning the Bedford, Texas, property.

TIG Vice President Wes Davidson said in a prepared statement The Morgan was acquired as part of its workforce housing strategy which identified underperforming Class B multifamily assets. TIG and S2 Capital renovated the clubhouse, leasing office and fitness center and upgraded about half of the units with stainless steel appliances, quartz countertops, wood-style flooring and custom cabinetry. The remaining units can be upgraded for additional upside. The partial renovation allowed the owners to increase rents at the property to a level that was competitive yet affordable based on the Area Median Income, Davidson added. Located at 1611 Oak Creek Lane, the community is currently 91 percent leased.

The property, which was constructed between 1980 and 1982 and consists of 66 buildings, offers one- and two-bedroom floorplans. Rents ranged from $890 to $1,319 with an average of $1,113 in 2019, according to Yardi Matrix data. Community amenities include four swimming pools, two spas, three laundry facilities, a fitness center, business center, clubhouse, basketball court and playground. There are washer/dryer hookups in all units, vaulted ceilings, above standard ceiling height, high-speed Internet access and fireplaces in select units.

TIG noted The Morgan is well-positioned to absorb the robust demand for workforce housing in the DFW metroplex. The market continues to outperform other large markets due to its job production and population growth with 130,000 new residents in 2019. North Texas added approximately 120,000 new jobs, sustaining a 3 percent growth rate and fueling strong investor demand for workforce housing, according to TIG. Multifamily deal volume in the DFW metroplex totaled about $5 billion, the company noted.

The price was not disclosed but the property is estimated to have sold for about $47 million back in early 2018 when it was acquired from Madera Cos., according to Yardi Matrix data. Bascom Group sold the asset to Madera Cos. in December 2014 for an undisclosed amount but the property became subject to a nearly $30 million loan held by Fannie Mae at the time. Bascom purchased two separate properties in 2006 and 2007—a 263-unit property for about $13.1 million and a 201-unit property for approximately $10.2 million and merged them after the second acquisition in February 2007, Yardi Matrix reported.

Pauls’ Texas Presence

Pauls was already active in the region. The firm acquired The Ascent at Lake Worth, a 265-unit multifamily community at 6303 Shady Oaks Manor Drive in Fort Worth, from Presidium Group in November. Yardi Matrix data showed the acquisition was financed through a $19.9 million Fannie Mae loan. The property, completed in 1970, is adjacent to Interstate 829 and close to major employers including Fort Worth Medical District, Alliance Town Center, Lockheed Martin and UNT Health Science Center. Pauls planned to make extensive interior and exterior renovations.

Formed in 1993, Pauls invests, develops and manages residential, industrial and office properties. The firm’s residential business totals more than $2 billion in residential asset value. Most of the residential properties—53 percent—are apartment communities with another 35 percent condominiums and townhomes and 12 percent single-family homes. The company has owned, managed and developed more than 7,600 apartment units and has assets in 18 cities.