798-Unit Foreclosed Multifamily Asset Changes Hands

HOUSTON-A Los Angeles company beat out 16 other potential buyers for ownership rights of the class B Palms on Westheimer. Post Investment Group bought the 798-unit multifamily asset from Petra Capital Management, a New York-based hedge fund.

In early 2011, Petra Capital foreclosed on The Palms on Westheimer, a 1970s-era complex at 6425 Westheimer Rd. Petra Capital retained Situs Asset Solutions LLC, as the property’s asset manager, a role that. Situs had been serving since August 2010. Situs and also marketed the complex for sale and represented Petra Capital during the closing.

David Malev, senior broker with Situs and Palms on Westheimer’s asset manager, tells GlobeSt.com he wasn’t surprised by the number of offers the property generated, given its proximity to the Galleria. “This is a well-located asset with a lot of value-add opportunities,” he explains, adding that Post Investment’s plan is to renovate and reposition the complex.

Situs director Maury Bronstein says Post Investments ended up with the property, not only because the company made the best offer, but because “they were able to show the seller they had their financing lined up and secured.” A sales price wasn’t provided because of a confidentiality agreement, but the Harris County Appraisal District values the asset at approximately $25.5 million.

Malev points out that the particular area in which Palms on Westheimer is located is seeing a lot of activity. “I wouldn’t say there are a lot of foreclosures here, but there have a large number of sales in the immediate area,” he remarks. “This area is improving. It’s always been a good area, and it’s getting better.”

Palms at Westheimer consists of one- and two-bedroom apartments, with an average rent of $525 per month. The unit sizes averages 700 sf.  Occupancy at the time of sale was in the high 70% range.