HOUSTON-Adding to its South Texas portfolio, the Bascom Group, with equity backing from Los Angeles-based Pacific Coast Capital Partners LLC, has acquired the 484-unit Chestnut Park Apartments. The deal pushes Bascom's Houston holdings well above the 1,900-unit mark, with more investments likely to come this year.
The purchase price for the complex at 505 Cypress Dr., sold by Alex Brown Realty Inc. in Baltimore, is being kept quiet. But, industry sources say similar properties in the far north submarket have traded in the $30,000 per unit range.
Ryan M. Akins, regional director in Dallas for the Irvine, CA-based Bascom, says the class C, 70%-leased Chestnut Park Apartments was appealing because of its upside potential. Bascom's $10,000-per-unit capital investment will ensure that the property moves into the class B category, says Akins, who sourced the deal.
"The property has great bones to it, but because of the deferred maintenance, it ended up deteriorating," Akins tells GlobeSt.com. He adds that similar properties surrounding Chestnut Park Apartments are in good condition and boast higher rents. "We're about 15% below market asking rents," he adds.
The Bascom Texas team has closed five deals in the past 18 months. Akins says more acquisitions will be likely as multifamily owners are forced into foreclosure due to Hurricane Katrina evacuees leaving.
On the other side of the coin is Houston's phenomenal job growth, which continues to stimulate multifamily housing demand. "During the past year, most of our activity was in Dallas. This year, there could be a heavier weight on Houston," Akins says. "Between increased insurance costs and vacancies increasing, a lot of owners are not able to hold on."
Built in 1977 and situated on 20 acres, the 51-building Chestnut Park Apartments has mostly one- and two-bedroom apartments, with a sprinkling three-bedroom units as well as loft- and townhouse-style units. The average unit size is 954 sf; the monthly rent is $654.
CB Richard Ellis senior vice presidents Dirk Goris in Dallas and Todd Marix in Houston represented the seller. Brian Eisendrath and Troy Tegeler with CBRE/Melody in Newport Beach, CA arranged the debt through Capmark Finance Inc. Bascom Texas' acquisition manager Jerry Hess and senior analyst James Dargenio teamed with Akins on the transaction.
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