Royal Oaks at Westchase TheRoyal Oaks at Westchase located at 11212 Westpark Dr. in Houstonhas 282 units.

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AUSTIN, TX/HOUSTON—San Antonio-based Lynd Acquisitions Group/LAGrecently acquired a portfolio of three garden-style apartmentcommunities in Texas valued in excess of $150 million. One propertyis in Houston and two are in the Austin metro area with a total of1,059 units.

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Lynd Acquisitions Group, which is an affiliated acquisitioncompany of LYND, a national multifamily management firm, has plansto sink $20 million into renovations.

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"This is the kind of value-add opportunity you dream about as anapartment investor," said A. David Lynd, CEO of LYND.  "Wehave been working with this seller for two years in order to securethis portfolio and are very excited to finally be closing thistransaction and getting on with the renovations."

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The seller, Sy Li, had acquired all three properties from theoriginal developers within the last 20 years and had performed noupgrades during that period.

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"Lynd approached me directly and I liked what they had to say,"said Li. "They executed exactly like they said they would."

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While there was one portfolio involved, there were two separateclosings: one for the Houston apartment and another for the Austinproperties, which are located in the suburb of Round Rock. The twocommunities in Round Rock were built in 2001.

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The Enclave Frontera located at 2800 La Frontera Rd. has 411units of one, two and three bedrooms. The 366-unit Lakeside at LaFrontera is located at 941 Hesters Crossing. It has one-, two- andthree-bedroom options. Both feature structured parking which isunique for garden-style product. The two properties werecapitalized with an equity investment from a major New York-basedinstitution and a $105 million loan from TPG Real EstateFinance.

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"The Austin multifamily market has been on fire for some timenow," said Constantine Scurtis, co-CEO of LAG who sourced theportfolio. "Dell's headquarters is nearby, and Apple has startedconstruction on a 133-acre campus that will generate approximately15,000 new jobs. Apartments in this area are highly sought after byinvestors, so securing these two deals says a lot about our abilityto find tremendous value-add opportunities."

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The third asset in the portfolio is located at 11212 WestparkDr. in Houston. The Royal Oaks at Westchase has 282 units with one,two and three bedrooms. Miami-based Florida Value Partnerspartnered with LAG on this deal. Prudential PGIM provided a $29million loan.

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"We are still very bullish on Texas, but considering where weare in this current cycle, we feel investing in value-addmultifamily assets provides the best opportunities for us," Scurtistells GlobeSt.com. "The properties we just acquired were builtextremely well, but they just need to be brought up to date so theycan compete with new construction, allowing us to increaseoccupancy and rents. Developing new product in today's environmentcan be trickier since the cost of land and construction isexpensive and we are reaching a saturation point in manyareas."

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LAG will invest $15 million on renovations and upgrades at theRound Rock properties and $5 million on the Houston community. Theplan is to modernize all amenities and clubhouses, and improveparking areas. LAG will spend approximately $12,000 per unitbringing the interiors in line with new construction by addingquartz countertops and ceramic tile backsplashes in the kitchens,as well as quartz countertops in the bathrooms. Plans also call fornew flooring throughout each unit, new cabinetry, stainless steelappliances, LED lighting, Nest thermostats and USB chargingstations.

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With this closing, LAG has completed $240 million in value-addacquisitions in the last six months and is working to close severalothers. Since 2017, LYND has acquired in excess of 5,400multifamily units primarily throughout Texas, Florida and Illinoisvalued at more than $375 million, and performed more than $25million worth of value-add rehabilitation work.

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Lynd thinks the value-add space is still the best place to be inapartment strategies, given the timing of the current cycle.

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"Lynd has always had a niche in the value-add space," Lynd tellsGlobeSt.com. "We have developed a knack for finding the rightproperties in the right locations at the right price. We can bepatient, but when we do find a good deal, we go after itaggressively. I think sellers like dealing with us because they areconfident we can execute: we have strong capital partners, know howto get a transaction done quickly and we have a proven record ofdoing what we say we are going to do. Lynd has always ownedproperties in Houston and Austin, so it's good to be back in thosemarkets. Employment remains strong and we still see a lot of roomfor rent growth. The only unknown factor as this point is theeffect coronavirus might have on the local economies. We'll have towait and see how that plays out."

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Indeed, value-add opportunities continue to highlightmultifamily investment in the Bayou City, attracting a diverse poolof buyers, according to a report by Marcus & Millichap.Pasadena and southeastern sections of Houston proper remainenticing to many investors as employees at the nearby refinerieshelp keep vacancy rates relatively tight.

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Lisa Brown

Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.