By Dees Stribling, Contributing Editor
Houston—Besyata Investment Group, a real estate investment company based in Brooklyn and specializing in value-add deals, has bought Silver Leaf, a 224-unit, Class B apartment property in Houston from Philadelphia-based Resource Real Estate. Neither party in the deal disclosed the price.
Investment specialist Marcus & Millichap reports that Class B+ deals are currently selling at cap rates in the 6 percent to 7 percent range, but may see further compression. “As best-of-class listings remain limited this year and cap rates hover near historically low levels, more investors will pursue Class B+ deals,” the company noted in its latest report on the Houston multifamily market. “Assets in this segment… not only offer more attractive first-year returns relative to top-tier properties, but may also be capable of commanding higher rents with limited cosmetic enhancements.”
Constructed in 1977 and refurbished in 2001, Silver Leaf is in the Sharpstown/Westwood submarket in Houston, not far from two of Houston’s largest employment centers, the Galleria/Uptown Park and the Westchase District. The property was 95 percent occupied at the time of the sale.
ARA Houston-based principal David Wylie, along with vice presidents Zach Springer, Russell Jones and Matt Saunders, represented Resource Real Estate in the sale. According to Wylie, Silver Leaf represents one of the first few “full circle” success stories in Houston.
That is, the seller purchased the distressed note on the property, invested a significant amount of capital and time in renovating and stabilizing the asset, and then the new buyer purchased Silver Leaf on a stabilized cap rate. For the past few years, most of the buyers of vintage assets have wanted to buy the opportunity with upside, and not the stabilized asset with a cap rate, Wylie explains. “We’re starting to see a trend of success stories on full circle stabilized class B deals,” he notes. “The key on this particular deal was a relationship with the right buyer.”