Investment Overview

Villas del Tesoro is a 229-unit apartment community located in Dallas, Texas near White Rock Lake. The property sits on a major thoroughfare and has easy access to Interstate-30, Loop 12 and Interstate-635 as well as strong retail and employment opportunities within one of the Nation’s most dynamic investment and rental markets. The one-mile average household income is above $90,000 and directly across the street, homebuilder David Weekley Homes completed a planned community called The Grove at White Rock Hills. The homes were completed in 2022 and sold all lots, but current inventory is being marketed at $550,000+ for 2,200 square feet. The subject property was built in 1964 & 1966 and subsists of 23 buildings comprised of brick veneer and hardie siding on concrete slab and pier & beam foundations. The property has pitched roofs, replaced in 2020, and is individually metered for electric and is heated and cooled by individual HVACs. The property sits on a spacious 11.68 acres and tenants enjoy a soccer field, large outdoor grill area, a pool and even a hammock garden. Another reason this is an excellent community for families is the property boasts a large average unit size of 870 square feet and is 60 percent two- and three-bedroom floorplans. Villas del Tesoro is being offered through Chapter 11 Bankruptcy Proceedings and presents a repositioning opportunity for a new investor to acquire a large multifamily property in Dallas proper at an attractive basis with an expiring deed & rental restriction and runway to dramatically increase the value and cash flows. Current operations are distressed with 43% occupancy in a submarket that averages 90%. By simply increasing occupancy to market levels, reducing utility costs through major water leaks and making select improvements to the exterior and amenities, a new owner can rectify the community environment this property has always had and push the cap rate well into the 10%+ range with conservative underwriting, including lowering effective rents by $50. The property is experiencing water leaks but can be contained with plumbing repairs and should lower from an occupancy-adjusted average of $150/unit/month to the prior 2023 average of $62/unit/month. Being an All-Bills-Paid property with no RUBS program for water currently in-place, these utility savings measures will go straight to the bottom line and immediately increase net operating income. Please review the Save Water Co quote on page 45 of this memorandum. The property is subject to a TDHCA LURA that expires in December 22, 2027. This shorter time horizon positions the asset for quality flexibility and offers a very clear path for rental upside as the property stabilizes. There is more information on the LURA and ensuing expiration on page 42 of this memorandum. Villas del Tesoro is being offered free and clear of existing debt with ample bridge options that can be tailored to specific repositioning plans.