Off-Market Sale Finds $1M for 24 Units

HOUSTON-A 24-unit multifamily property in Houston's Inner Loop/Midtown area has traded for $1.1 million, significantly more than its appraised value, in an off-market transaction to a first-time buyer of commercial real estate.

The private investor from Austin, buying as 2004 Museum Place Ltd., took title to the class B, Museum Place at 1116 Banks St. from a single-asset holding company led by Thomas Noons of Houston. The first-time buyer paid $45,833 per unit or $14,633 more than Houston's average selling price, according to second-quarter market data from Marcus & Millichap.

The seller owns seven other Houston-area apartment complexes and "a mixed bag of other real estate," according to Kevin McCarthy in the Houston office for Phoenix-based Hendricks & Partners. McCarthy brought buyer and seller together for the off-market transaction. According to Harris County tax records, the seller acquired the three-building complex, sitting on about one-third of an acre, in 1997. Its current assessment is $452,420.

The 41-year-old Museum Place, located in the city's eclectic Museum District, is 100% occupied. Its units range from 450-sf efficiencies, renting for about $475 per month, to 925-sf two-bedrooms at a tab of about $775 per month. According to Marcus & Millichap's latest report, this year's average monthly rent is expected to rise 1.9% to $680.

"The return of employment growth fueled by higher petroleum prices and increased trade will encourage buyers to pursue additional upside opportunities," the Encino, CA-based brokerage house's researchers wrote. "This will help to nudge the median price per unit above $31,200 in 2004."