Inland's $64M Opens Texas Multifamily Doors

HOUSTON-In a 30-day look and five-day close, Inland American Real Estate Trust Inc. has bought its first multifamily property in the state. The $30-million buy is just the prelude for what's to come.

The Oak Brook, IL-based Inland has grabbed the 296-unit Waterford Place at Shadow Creek Ranch Apartments in Pearland, a 16.9-acre first phase at 200 Business Center Dr., from Davis Development Inc. of Stockbridge, GA. And, it will get the first look at the 275-unit second phase, which is now coming out of the ground, confirms Matt Tice, Inland's vice president of acquisitions. In addition, Inland's SEC filing reports a $34-million contract has been placed for the 364-unit Landings at Clear Lake at 501 Sarah Deel Dr. in Webster.

"We sold the first multifamily property in Houston to Inland, we're proud to say," stresses David Wylie, principal in the region for Apartment Realty Advisors. He tells GlobeSt.com that Inland wasn't the highest of the 12 offers, but the five-day closing and reputation for doing what it says were the dealmakers.

"They are a very well-known closer. Once they lock in on a deal, they perform," Wylie says, "and that's comforting to a seller. We were expecting it to sell quickly at a good number."

The 16-building Waterford Place, developed last year, was 95% leased at sale time. It has one-, two- and three-bedroom units averaging 1,115 sf. The average monthly rent is $1,102.

But its location was the drawing card: about nine miles south of the Houston Medical Center and not much farther from the CBD.

According to the SEC filing, Inland closed Waterford Place, but may leverage it down the road. The same MO will be used for the Landings at Clear Lake, a mix of 232 one-bedroom and 132 two-bedroom units in 16 buildings that Atlanta-based Trammell Crow Residential brought on line last year. The SEC filing says the asset is 89% leased.

Inland American's SEC filing says $1.7 billion of a $5-billion goal had been raised by the end of 2006. The capital is earmarked for acquisitions of all product types, with no set allocations per state. Last year, 20 million sf was acquired, of which 10 million sf was retail. Waterford Place is the third multifamily property to roll into the portfolio. The other two properties are located in Chicago suburbs. During Inland American's early days, it acquired Houston-based NewQuest Properties Inc.'s retail portfolio for $442 million.

Inland American is looking at multifamily properties, predominately class A, in all Texas metros, says Tice, who brokered Waterford Place. He says the asset's selling points were location and price. "You're in the right market in Houston, a growing area" with limited competition, he explains.

As the locals know, Shadow Creek Ranch is a master-planned community that's still being developed with retail and office as well as multifamily and single-family units. "The trick was talking to the office and retail developers to get a clear picture of the community's future and successfully convey that to the investment community," Wylie says in a press release about the transaction. He and ARA principals David Mitchell, David Oelfke and Matthew Rotan steered the sale.