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Sunday, Jan 29, 2023

Buchanan, Arnel Close 354-Unit Apartment Deal in Texas

1st Formal Deal Between OC Investment Firms

Newport Beach-based Buchanan Street Partners continues to add to its Texas multifamily portfolio, this time in an advisory capacity.

The real estate investment firm assisted Costa Mesa-based Arnel & Affiliates in its acquisition of a 354-apartment complex in McKinney, marking the first in the state for the development and investment company founded by the Argyros family in the late 1960s.

It’s also the first formal deal for Arnel and Buchanan, the latter of which has a growing apartment portfolio in Texas topping 1,600 units.

Arnel acquired the property from multifamily developer JPI; the sales price was undisclosed. The buyers took out a $56 million loan to fund the deal, according to local reports.

Jefferson Terrace, which includes 209 one-bedroom, 115 two-bedroom, and 30 three-bedroom units, was 94% occupied at the time of sale.

The deal is Buchanan’s fifth multifamily property in Texas, where the investor also owns commercial properties including office and industrial.

Buchanan returned to the Texas multifamily market in October 2020 with the purchase of the 351-unit Waters Edge in Grand Prairie. Prior to last month’s sale, its most recent acquisition in the state was for the 387-unit Jameson at the Bluffs, which closed in November 2021.

The company “plans to continually expand its footprint in the DFW region over the coming years given the strong submarket fundamentals and overall economic growth of the region,” it said in a statement to the Business Journal.

Arnel Sale

Arnel’s multifamily portfolio is closer to home—the company is reported to own close to 4,500 apartment units in Orange County.

In a rare sale for the local developer and investor, Arnel in September sold one of its long-standing Santa Ana development sites at 1801 E. Fourth St. in a $51 million multifamily land play.

San Diego-based Ledcor Group paid about $6 million per acre for the site adjacent to the Santa Ana (5) Freeway, where it plans to kick off construction next year on what will be one of the city’s largest mixed-use residential projects in recent years.

Newport Beach-based Waterford Group partnered with Arnel as a fee development partner in 2018 to head the entitlement process for the redevelopment; it won approvals in 2021 for a 644-unit apartment project with some ground-floor retail space and about 1,400 parking spaces.

OC Activity

Buchanan’s multifamily portfolio does not touch Orange County, but spans in other areas such as Arizona, Colorado and sometimes Utah, in addition to Texas.

Locally, the company has a few medical office conversion projects in the works in Newport Beach and Laguna Hills.

Its last OC acquisition was last year, when it paid $24 million for the E405 Euclid Shops, a showroom retail complex just north of the San Diego (405) Freeway on 4.9 acres.

That deal was the first local buy for Buchanan in the past six years.

Lending Boom

Buchanan is preparing to wrap its most active year for its mortgage business, with strong demand across property types for bridge and construction loans.

“It’s been a tremendous year for that business,” Buchanan CEO and President Tim Ballard told the Business Journal.

The company expects to top $350 million in loan business this year.

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