Just-Sold 264-Unit Complex Primed for Rehab

PASADENA, TX-A Houston investor has stepped up to buy an 82%-occupied, 264-unit complex on the outskirts of Houston in a repositioning plan backed by a rehab that will cost in excess of $1.3 million.

The Vista Del Sol complex is situated at 701 Preston Ave. in Pasadena, 17 miles southeast of Houston’s city line. Buyer of record, South Preston LP, is planning to pump $5,000 to $6,000 per unit into the complex, Ed Cummins III with the Houston office of Phoenix-based Hendricks & Partners tells GlobeSt.com. He says the buyer is experienced at renovation projects, having completed similar turnarounds for multifamily assets in Houston as well as Pasadena.

Cummins is hushed about the selling price, but did say it fell below the $4.8-million ask of its Dallas-based sellers, TBAN Properties No. 1 Ltd. and TBAN Properties No. 1 LLC. Cummins says the partnership sold the property in order to move capital to other deals.

The Vista Del Sol brings in 48 cents per sf in rent, with the average unit being about 850 sf. Cummins estimates the post-renovation price will push above 60 cents per sf. The buyer also is tackling an individual water meter project.

The 40-year-old complex, situated on 10 acres, was assessed at $2.7 million in 2002, according to the Harris County Appraisal District. In addition to Cummins, Mark Hendricks in Hendricks & Partners Houston office negotiated the transaction.

Multifamily investment sales are steady, but they are not at the “fevered pitch of a year ago,” says G. Craig LaFollette, senior vice president in Houston for CB Richard Ellis Inc. He expects a continued drop-off this year and into next as the apartment market in general slows down because demand can’t keep pace with new and old supply. Houston now has 9,400 units in lease-up with another 12,500 under construction, he says. Using the barometer that it takes five new jobs to fill one unit, supply is sure to outpace demand for awhile since modest job growth is all that’s been predicted. Consequently, he says the multifamily sales picture isn’t quite as attractive as it was in 2002.