Competition Remains Despite Oil Dip and Supply

KATY, TX—Despite the Houston market being hit hard with the recent dip in oil prices and a large number of units on the West side having similar premium rent levels, well-established properties that provide the same quality and level of amenities have been able to stay competitive. One such example is a 962-unit multifamily portfolio that recently closed, totaling $76.88 million.

The collateral was backed by three class-A garden-style properties located in Katy and Grand Prairie. The portfolio contains three Fannie Mae loans, all of which were structured with fixed rates and 10-year terms, followed by 30-year amortization periods. The portfolio was refinanced during the course of six months.

Ashley House is located within Cinco Ranch in Katy. Cornerstone Ranch is just minutes away, adjacent to The Golf Club at Cinco Ranch. Stone Lake Apartment Homes is situated between Dallas and Fort Worth in Grand Prairie, and offers lake and golf course views.

Doug Hart, vice president in Walker & Dunlop's multifamily finance group, led the origination team in arranging the debt. The team leveraged its deep understanding of green financing programs to implement Fannie Mae's Green Rewards program for Cornerstone Ranch. This strategy will provide significant cost savings to the borrower in the form of a reduced interest rate and lower utilities once the required energy saving measures are carried out.

“Despite the Houston market being hit hard with the recent dip in oil prices, Ashley House and Cornerstone have been able to maintain occupancies above 94%,” Hart stated. “The market in Dallas continues to remain strong, which is reflected in a consistent occupancy at or above 95% at Stone Lake.  The properties' success is thanks in large part to the amenity packages offered, alongside competitive rental rates and a talented management group.”

All three properties have upscale amenities including swimming pools, clubhouses, fitness centers, playgrounds, business centers, a movie theater at Cornerstone and an enclosed basketball gymnasium at Ashley House. The properties are in close proximity to major thoroughfares, retail centers with national tenants, golf courses, other recreational amenities and schools of all levels.

“The west side of Houston has seen a tremendous number of units come on line in recent months, all of which are competing against each other at a premium rent level,” Hart tells GlobeSt.com. “Properties like Ashley House and Cornerstone, those that are well established within the submarket and provide the same quality of living and level of amenities, were able to stay competitive despite the new supply of units.”