HOUSTON—The MSA boasts one of the lowest costs of living among the nation's 23 largest metropolitan areas, a key contributor to Houston's ranking among the nation's most desirable cities for companies looking to relocate or expand operations. With jobs comes the need for housing, which prompts investors to look here for acquisitions.

After a recent acquisition, The RADCO Companies plans to spend upwards of $11.3 million on capital improvements to modernize and upgrade the newly acquired multifamily communities, Westchase Crossing and Wyndham Park apartments. With these purchases complete, the properties mark the 10th and 11th acquisitions of 2016 for RADCO. These are RADCO's 62nd and 63rd acquisitions since 2011 and its third and fourth communities in the Houston market.

The properties have been renamed City Chase and City Station, respectively, and together add 814 class- B units to RADCO's portfolio. Both properties will be managed by RADCO Residential, the company's proprietary management platform.

“We chose these properties because we believe in Houston's recovery,” Norman Radow, founder and CEO of The RADCO Companies, tells GlobeSt.com. “Moreover, class-B communities with modest rents have a competitive edge in the market, which made the acquisition of these two communities compelling. City Chase is in a superior location. City Station offers the best value in its submarket. Both properties are untouched early 1980s vintage, which provides us a significant value-added opportunity. In short, we like the city, the basis, our actual locations and the story behind these latest acquisitions.”

RADCO financed the acquisition with KeyBank and using private capital. Since August 2011, the company has raised more than $469 million in private capital to fund its acquisitions, making it one of the largest private capital companies of its type in the nation.

Houston boasts a diverse business economy that has recorded growth recently in healthcare, high-tech industries, medical research and professional services. Despite the recent volatility of oil prices, Houston has been consistently ranked as one of the fastest growing cities in the United States during the past five years.

“Public confidence in Houston has wavered with the recent oil price fluctuations and institutional investors have since fled the city. This has caused cap rates to widen, thus allowing otherwise solid assets to be acquired at a discount to their intrinsic value,” said Radow. “We are thrilled to expand our presence in the market with the additions of City Chase and City Station. Both properties were acquired at an excellent basis, and we are confident they have significant upside potential.”

City Chase is situated within the heart of the Westchase submarket just off Westheimer Road, providing access to major employment drivers in the nearby Westchase Business District and Energy Corridor. The gated community was built in 1981 and consists of 366 units across 9.4 acres. Averaging 762 square feet, the property offers a combination of one- and two-bedroom units, with select units including washer and dryer hookups. The community has an expansive pool deck with a hot tub, two laundry facilities, barbecue and picnic areas, and a WiFi-equipped business center.

City Station is located in the Cypress Station submarket at the confluence of Interstate 45 and Cypress Creek Parkway (FM 1960), which provides easy access to the area's largest employer–ExxonMobil. The 448-unit community was built in 1978 and consists of 34 two-story buildings across 18.9 acres. Averaging 797 square feet, the property offers a combination of one-, two-, and three-bedroom units. The community amenities include five saltwater swimming pools, three laundry facilities, gated access, covered parking and a picnic station with a grilling area.

The improvements will consist of upgrading unit interiors, enhancing community entrances, executing rebranding initiatives, implementing infrastructure improvements and significantly expanding on-site amenities. Specifically, RADCO's capital plan for both properties will concentrate heavily on modernizing the unit interiors with upgraded appliance packages, flooring, cabinetry, lighting and hard-surface countertops. Additional washer and dryer connections will also be installed in select units at City Chase. The scopes for the value-added amenity and exterior improvements include immediately remodeling and updating the clubhouses, replacing roofs, adding upgraded pool furniture, and revamping the grilling areas with upgraded gas grills, picnic areas, and new fire pits for residents to enjoy.

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 /

Multifamily Investor Believes in Houston's Recovery

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