Limited Multifamily in Southbelt/Ellington Means More Value-Add Options
Magnolia Grove’s strategic location between I-45 and Beltway 8, along with nearby repositioned properties boasting significant rent growth, created a compelling value-add opportunity for the new owner.
HOUSTON—Due to limited supply in the Southbelt/Ellington neighborhood, more value-add multifamily properties are finding new owners. One recent example is Magnolia Grove, a 268-unit multifamily property in southeast Houston, which sold for an undisclosed purchase price. The garden-style community was purchased by a Dallas-based privately owned company.
Berkadia senior managing director Ryan Epstein, director Jennifer Ray and associate director Scott Bray of Berkadia’s Houston office arranged the sale on behalf of Lantower Residential, a real estate investment firm based in Dallas. Senior managing director John Koeijmans and associate director Austin Blankenship of Berkadia’s Dallas office arranged the acquisition financing, a 10-year floating-rate Freddie Mac loan.
“The limited supply in the area made this an ideal value-add candidate, with intent from the buyer to continue improving the asset and capture pent-up demand,” Epstein tells GlobeSt.com.
Magnolia Grove is situated at 12601 South Green Dr. and was built in 1984. One- and two-bedroom units include walk-in closets and private balconies/patios. Community amenities feature a clubhouse, swimming pool, outdoor grilling plaza and 24-hour fitness center.
Located in the Southbelt/Ellington neighborhood, Magnolia Grove is approximately five minutes away from Interstate 45 and Sam Houston Expressway, providing direct access to downtown and Greater Houston. The transit corridors connect residents to employment hubs such as the Texas Medical Center, Hobby Airport, Ellington Airport and the Port of Houston.
“The asset’s strategic location between Interstate 45 and Beltway 8, along with nearby repositioned properties that have seen significant rent growth, created a compelling value-add opportunity for the new owner,” said Epstein. “Continuous demand throughout the MSA will allow for the property to achieve market rate rents on par with neighboring communities, providing noticeably improved operating income.”
Houston multifamily rents rose by 1.9% and occupancy bettered by 20 basis points to 89.8% during the fourth quarter of 2019, according to a report by CBRE. Houston absorbed 1,037 units of multifamily in fourth quarter to finish out the year, bringing the annual tally to 14,026 units absorbed.
Deliveries totaled 13,363 multifamily units in 2019. Construction reached a high point with 25,323 units underway, says the CBRE report.