HOUSTON—The Houston market has been effectively redlined by institutional equity investors and it's been nearly impossible to secure financing. However, one company was able to secure joint venture equity for a new suburban development, as well as the sale and financing for Houston core assets and Austin's hottest zip code.

The first property is a new multifamily development in Houston's petrochemical hub, Boterra Bay Apartments, being developed by The Boterra Group. Baytown, TX is the epicenter of petrochemical industry growth, 20 miles east of downtown Houston along the Houston Ship Channel, undergoing $35 billion in capital expenditures and projected to create 265,000 jobs. Class-A communities located in Baytown carry an average occupancy of 98% and the submarket has experienced 11.5% rent growth during the last six months.

ARA Newmark executive managing director Adam Allen secured joint venture equity and construction debt financing from a regional bank to start development of the 384-unit garden-style multifamily development. Equity in the amount of $10.5 million was obtained from Edison Capital Holdings, a Dallas-based joint venture equity provider.

“Although the market has been mostly redlined by institutional equity investors, the east Houston story remains attractive due to limited supply and strong job growth from the port and downstream energy sector. There are no other projects under construction in the submarket, creating a favorable environment for development,” Allen tells GlobeSt.com.

The next property is a class-A 334-unit apartment community, AMLI at the Med Center, in Houston's hottest zip code. The property was built in 2000 on a 14-acre site near the Texas Medical Center and Old Spanish Trail. ARA Newmark closed the sale, and handled debt and equity for the transaction. Vice chairman Matt Rotan represented the seller, AMLI Residential, which has six other apartment projects in Houston and thousands of units across the nation. The buyer was F & B Capital. Allen advised on financing, and the debt and equity lender was MetLife, a Chicago-based PE fund.

“AMLI Med Center was uniquely located in the medical center with over $2 billion of new construction projects underway today. Houston has never had a year where it's lost medical jobs, which made buying this asset an attractive, low beta play for both lender and equity group. Additionally, the property had not been renovated since being built in 2000, providing ability to rehab the property and boost rents,” Allen tells GlobeSt.com.

ARA Newmark also closed and secured debt for a class-A community, Berkshire SoCo. The 375-unit midrise apartment community with 22,000 square feet of ground-floor retail is in Austin's South Congress area, the most sought-after rental market in the city.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

Instant Insights /

Despite Redlining, Multifamily Financing Gets Done

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