"Cronus was the strongest player in the field by far. They put down significant earnest money and had enough liquidity to get the deal done," says Tom Wilkinson, president and broker with KET Enterprises Inc. in Houston. Wilkinson teamed with Jim Hurd of Houston Income Properties Inc. to market the class B asset at 12200 Fleming Dr. on behalf of the local seller.
Wilkinson tells GlobeSt.com the ultimate showdown for the 29-year-old asset, which came with a $15.8 million Fannie Mae assumable mortgage, was between Cronus and two other buyers, one of which was a TIC. The TIC buyer was strong, he adds, but Fannie Mae wasn't comfortable with the TIC structure.
"This was a good, cash-on-cash play, especially at 80% occupancy," Wilkinson notes. "It's located on I-10, near the Houston Ship Channel and is only about 80% occupied. The theory behind this is, with moderate rehab, the buyers will enjoy a good cash flow." With the buy, Cronus is taking over the 10-year, 30-year amortization assumable mortgage with a 5.05% interest rate and 2013 due date.
The 55-building complex is situated on 25 acres and has a mix of one-, two- and three-bedroom units. There are rent restrictions in place for 359 units, of which 218 are reserved for low-income tenants, and 141 units dedicated to very low-income tenants. The average unit size is 726 square feet, and average monthly rent is $540.
Cronus is adding Timber Ridge Apartments to its growing Texas portfolio. Other properties include joint-venture ownership of 528 units in three separate complexes in Arlington, TX, as well as a 128-unit buy in Houston last spring.
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