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Like Nessie or Big Foot, equity for multifamily development in the suburbs is something most people can't quite capture. Unless, of course, you're in Houston.
ARA VP Adam Allen
closed four equity deals
for multifamily construction here, and three were in the 'burbs. He says our fundamentals are coaxing cash from institutional and private investors. Strong sponsors help—these projects are with Alliance Residential and Trammell Crow Residential. The deals: the 203-unit Broadstone 3800
, Midtown; 370-unit Broadstone Greenhouse
, Katy; 380-unit Alexan Creekside Pines
, The Woodlands; and 354-unit Alexan Enclave
, Energy Corridor. Investors find the latter two submarkets particularly compelling
, viewing them almost as infill sites. Adam has two more
equity deals closing here (and one in Austin) this quarter.
The biggest challenge in financing Broadstone 3800 (above), he says, was getting equity comfortable with the amount of new supply
being built inside the Loop. But Midtown is the hot spot for young pros
, and this project is being built in the path of growth (the southern edge). Lots of streetscape improvements
are under way (including $8M
on West Alabama), and the submarket's rent growth
is strong. Plus, deals are trading above replacement
, making development lucrative. Adam tells us this investor was new to development
, a trend that will continue as traditional equity players are either gone or smaller than last cycle.
Ain't Goin' Down
CRE's darling multifamily will continue to dominate in 2013
, says JLL's new Texas multifamily managing director Jeff Price
. Why? First, Jeff says, it's the most popular
investment vehicle for many investors. Second: the reliable and attractive debt
with Fannie Mae, Freddie Mac, and life companies. Third: the fair amount of new construction
still hasn't met demand. Fourth: transaction volume
—in virtually every city from '05 to '07—was huge. Assuming seven-year holds, '12 through '14 will be big transaction years. Finally, Texas markets are experiencing solid growth. Even with a lot of competition, there are still outstanding investment opportunities
The JLL DFW multifamily team: David Fersing
, Janet McEowen
, Bill Simmons
, Jeff, Alisan Rutland
, and Susan Gosslee
. JLL acquired The Apartment Group
, where Jeff was founder and prez, earlier this month. JLL's attributes influenced his decisions, and his realm grew from DFW and Austin to the entire state. Jeff will QB efforts to add more people to the team. Something you may not know about Jeff: He's a big fan of The Duke
. His favorite John Wayne movies: The Searchers
, In Harm's Way
, and The Quiet Man
. (If you look closely over Jeff's shoulder, you'll even see a John Wayne photo on his desk. That's right, pilgrim.)
Transwestern Closes Three
Transwestern's multifamily team (lead by SVP Ed Cummins
and VP Clint Duncan
) closed the sale of three
multifamily properties totaling 1,039 units
: Oaks of Westchase, Clarke Springs, and the Mills. Clint tells us Clarke Springs
went to a California buyer in a 1031 exchange. It was a value-add, 149-unit manufactured housing project that offered significant cash-on-cash returns
with additional upside. Manufactured housing
can be challenging to finance, he says, which made it a trickier sell. But this buyer purchased it all-cash. (Just once we want someone to pay for a property in a pirate chest full of gold.) Transwestern repped seller Starwood Capital.
The duo predicts we'll see a number of stabilized Class-B and C
properties selling this year. Many will be deals that sold distressed a few years ago and have been fixed up and put back on the market
. (Don't call them distressed, call them "certified pre-owned," like Lexus.) Ed says debt and equity are available for these deals, as well as a strong appetite
from investors looking for yield. The team has three assets totaling 1,162 units under contract
and closing soon, including a 304-unit asset at I-45 and Beltway 8 North (going to a Dallas buyer that was very active here last year) and two properties in the 1960/I-45 corridor: a 464-unit asset that was recently foreclosed and is going to a syndicator from California, and a 378-unit community selling to a Midwestern private group.
Older asset in a secondary market? Financing may be a challenge,
but there's money available
if your property and operations are in good shape, the submarket is doing well, and you have a solid sponsor, according to Berkadia SVP Stewart Campbell
. He and NY-based colleague Tom Toland
have arranged a $6.6M
refi through Freddie Mac for the 184-unit, Class-B Riverwalk Apartments
in Conroe. The 10-year, fixed-rate loan (at 70% LTV) will go toward capital improvements and equity for future acquisitions; it also lowered the borrower's interest rate from 6% to 3.87%
. Bonus points for long-term owners
: This borrower's owned the property for over 10 years and has a good history in the Conroe area.
We also caught up with Berkadia's local team, SVPs Cutt Ableson
and Jon Gilfillan
, who've arranged a $10M
refi through Fannie Mae for the Augusta Meadows Apartments
in Tomball. The process took almost 18 months
, they say, as the Class-A, 264-unit property was built in '11 and was leasing up more slowly than anticipated. In other Berkadia news, the firm acquired Hendricks & Partners to form Hendricks-Berkadia, Apartment Real Estate Advisors
, bringing investment sales and research into its fold.
- Friday, Feb. 1, 7:30am-10:30am. Bisnow's Houston Future of the Energy Corridor. Hear experts talk about the area with over 20M SF of office space and another 13M SF projected by 2030. Register today.
- Wednesday, Feb. 20, 7am-10am. Bisnow's Houston Future of HWY 290/North Loop West. The 290 Corridor is one of the fastest growing areas of Houston, with a current population of almost 590,000 residents that is projected to grow by 64% through 2035. Hear about the future from the experts. Register today.
"They say such nice things about people at their funerals that it makes me sad to realize that I'm going to miss mine." -Garrison Keillor What would you like to see a Bisnow story about? Tell Catie Dixon, email@example.com.