940-Unit Apartment Portfolio Trades in Houston
- Dec 20, 2011
Houston—The apartment market is bustling in metropolitan Houston, and investors recently came out in droves to lasso a three-property, Class A apartment portfolio marketed by ARA on behalf of a tenant-in-common seller. Camden, a local-based national multifamily REIT, emerged victorious and has now added 940 units to its holdings. All parties involved are keeping mum on the price tag.
The assets involved in the transaction include Piney Creek, a 318-unit property in Houston; the 304-unit Spring Creek in Spring; and Downs at Cinco Ranch, a property in Katy offering 318 residences. The luxury apartment communities, built by Trammell Crow Co. in 2004 and 2005, had an average occupancy level of 94 percent at closing.
Combine a high-quality property with a desirable submarket and you get a flock of eager investors. “There were a lot of different groups interested,” David Mitchell, a principal with ARA Houston tells MHN. Mitchell teamed with fellow principals David Oelfke, Matt Rotan and David Wylie on the transaction. “There were some institutions, some private equity groups, private syndicators. At the end of the day, Camden was the buyer, and as the broker we couldn’t be happier and the seller couldn’t be happier because Camden is such a good buyer.”
The seller was not just seeking the buyer with the highest bid; it was looking for the buyer with the best chance of following through—and following through on the double. “They wanted someone that they knew would close the deals and someone they knew would close the deals at the prices that they agreed to, and close them quickly,” Mitchell explains. “Camden is one of the few firms that can go out there and buy a three-property portfolio and close it in approximately 90 days.”
Camden, which acquired the assets in a partnership with the Teacher Retirement System of Texas, brought a bevy of attributes to the table that gave the seller that coveted warm and fuzzy feeling. “Camden is Houston-based so they understand Houston very well and they’ve got a wonderful team in place. They’ve got their acquisition team, they’ve got their due diligence team, they’ve got a finance team, so when they’re acquiring properties they are a pretty well-oiled machine.”
The Houston apartment market is on fire. As per a fall report by ARA, positive absorption over the last eight quarters coupled with a decrease in development has combined to push vacancies down to under 10 percent. “Supply is at a 16-year low and Houston has been number one or two in job growth for the last two years, so when you combine those two things, occupancies go up and rents go up,” Mitchell notes. “So the fundamentals in Houston are really good right now.”