JRK Buys in Texas – Again

HOUSTON-A California-based fund continues expanding its Texas footprint with the acquisition of the class A, 304-unit Broadstone West Eighteenth. JRK Property Holdings bought the class A asset from Broadstone W. 18 Street Alliance LP, a joint venture between Alliance Residential LLC and Prudential Insurance Co.

The Los Angeles buyer did not disclose financial details of the transaction. However, the company paid a combined $80 million for Broadstone West Eighteenth and the 273-unit Terraces at Highland Reserve in Roseville, CA. The Harris County Appraisal District values the 2007-built Broadstone West Eighteenth at $27.7 million.

The equity investment for the asset at 2727 W. 18^th St. came from the $1 billion JRK Multifamly Platform Fund. JRK president Bobby Lee tells GlobeSt.com that an additional half-million dollars will be invested to boost the property’s curb appeal and amenities.

“This is one of the better locations in terms of where to live, and the exterior construction is probably among the top tier,” Lee remarks. “It has a really nice club house and the bones. What’s missing is that ‘wow’ factor when you come into the complex.” Such factors, he goes on to say, can include anything from a grand entryway to a water feature.

The other thing missing from the property, he continues, are specific amenities like a high-end wine room or high-end game room. Because of that, he notes, Broadstone West Eighteenth is trailing comps in the area.  Once JRK gets those amenities online, he says, rents can be raised.

However, investment in the upside is well worth it, Lee comments, because the deal with Alliance enabled JRK to obtain the asset at well below replacement costs. “We’re in a location in which land values are fairly high, so we’re protected from new development,” he comments.

Broadstone West Eighteenth offers one-, two- and three-bedroom units. Occupancy is at 97%. Lee says that, for the time being, JRK will keep the Broadstone brand name, which is typically affiliated with Alliance. After the first of the year, he adds, the name will change.

JRK has nothing more in the Texas pipeline for the remainder of 2010, though the company owns and manages about 4,000 units throughout the Houston area. He did say, however, that JRK is ready to put a large deal in Oklahoma under contract.

Other Texas assets JRK acquired through its Multifamily Platform Fund are the 452 unit Broadstone Centreport in Fort Worth; the 250-unit Kia Ora Park in Plano and the 268-unit Retreat at Cinco Ranch in Katy.