Recent trends in apartment living include a growing desire for renters of all ages to live in downtown urban cores. Recognizing this trend, and taking advantage of the dearth of amenity-rich apartments in the vibrant, rapidly-gentrifying West End Historic District in Dallas, Texas, Griffin Capital Company, a Los Angeles-headquartered, privately-held investment management company partnered with leading multifamily developer Fairfield Residential, a Brookfield Company, to build Fairfield at Ross.
Fairfield at Ross, is a 267-unit luxury apartment building located at 555 Ross Avenue, at the corner of Ross and Houston Street. This project contains approximately 224,830 net square feet of rentable space in a five-story, wood framed residential building wrapped around a six-level parking garage with an estimated 408 spaces.
Fairfield at Ross Amenities
The project boasted several unique elements including a rooftop amenity deck offering spectacular views of downtown Dallas, and featuring a swimming pool, hot tub, and a 24-hour, state-of-the-art fitness center.
Shifting these amenities to the roof (from the ground floor level where they are typically located) added more than $1 million to the construction budget, but the design and development team correctly predicted that this “wow factor” would enhance lease-up economics which would more than compensate for the additional cost.
The Financing Package
One other unique element is the financing package crafted by Griffin. Fairfield at Ross employed a combination of low cost EB-5 financing for a portion of the equity, equity from individual investors sourced in a private placement offering by Griffin’s managing broker dealer, Griffin Capital Securities, and conventional first mortgage debt financing.
Investment Strategy and Result
The strategy for maximizing value at Fairfield at Ross was “build, stabilize and sell”. The construction phase was completed on time; there were no significant weather delays and the project was completed on budget.
The stabilization process took slightly longer than projected due to some exogenous events in downtown Dallas, but the pricing of the rental units was very close to pro-forma, and in late summer the project was 97% leased.
Finally, the sales process was successfully executed one year earlier than anticipated, as the Dallas multifamily market was targeted by many institutional buyers and there were relatively few high quality projects offered for sale. CBRE widely marketed the property, toured over twenty different potential buyers, and received nine offers. In September, 2017 Mesirow was selected as the purchaser at a price that resulted in high double digit returns to Griffin’s investors.