X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

HOUSTON-The 400-unit Westchase Forest complex at 11355 Richmond Ave. in the Westchase submarket has been sold to Drever Real Estate Opportunity Fund LLC. It’s the third large Houston apartment community in 10 months to be purchased by an institutional real estate fund headed by Maxwell Drever, who has accumulated a $500-million war chest for acquisitions.

Drever tells GlobeSt.com that he looks for financially distressed or physically unappealing properties in good locations. The Westchase Forest complex is a classic case of the “worst looking property on the best street,” he says. Thus, a $1.2-million rehab, inside and out, is on the drawing boards for the three-year-old complex.

Drever says the aim of the enhancements is not to increase rent, but to keep the complex up to par while waiting out the economic recovery. “We don’t expect great things initially,” he says, “but if you don’t improve, things tend to go south.”

Exterior changes will include stone pavers and landscaping. The club house and fitness center will be expanded and a media room added. Interiors will get granite countertops, new lighting fixtures, crown molding and ceramic tile kitchen floors and foyers.

Drever says there is a real disconnect in the multifamily market as operational costs increase due to insurance and household incomes decrease with the job slowdown. Many apartment owners are cutting capital expenses to sustain profits and delaying needed property improvements. Drever points to a national survey of 1.5 million units that shows owners slashed improvements by 35%. At some point, the deferred maintenance will catch up and selling prices will go south, explains Drever.

Westchase Forest’s selling price was not disclosed, but industry sources say it went for 15% below replacement cost. Seller Intercapital Westchase of Houston was represented by Novy Investments Inc., a Houston brokerage firm.

Brant Smith of the Houston office of Dallas-based Holliday Fenoglio Fowler LP put together an $18.5-million financing package through Aetna Life and Casualty Co. in 10 days. Joe Gillespie Jr., director of acquisitions for Tiburon, CA-based Concierge Asset Management, sponsors of the Drever REO fund, headed the buyer’s team.

Lester “Butch” Novy took the deal to Drever after another broker’s buyer couldn’t get financing. A contract was signed within 24 hours. Drever says the ability to move fast on financially distressed properties is part of the game. When he bought the 201-unit Moorings in Clear Lake a few months ago, the deal closed in 30 days because an investor wanted a quick exit.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.