Harbor Group Picks Up 776-Unit Baybrook I, II

WEBSTER, TX-In an effort to strengthen its Texas portfolio, Harbor Group International LLC has acquired the 776-unit Baybrook Village I and Baybrook Village II. Market sources say the complex likely traded for $31 million to $35 million.

Harbor Group’s first acquisition in the Clear Lake submarket came from a Mississippi partner of Newport Ventures Inc. of Phoenix. Southern Cross Construction Co. of Hattiesburg, MS previously was identified as the lead buyer in in November 2006 when the 2702 W. Bay Area Blvd. asset last changed hands.

The new owner plans to invest $2.5 million into exterior and interior upgrades of the 408-unit Baybrook Village I and 368-unit Baybrook Village II. T. Richard Litton Jr., president of Norfolk, VA-based Harbor Group, says upgrades will begin immediately, with the majority of the work to be completed within six months.

“The property is currently, from an occupancy standpoint, underperforming in the market,” Litton says. “I think the day-to-day operational efficiencies can bring value to the property.” He tells GlobeSt.com that rents will be pushed 1.5% to 3% during the next three years. Occupancy is at 92%, with in-place rents at approximately 81 cents per sf. The one-, two- and three-bedroom units range from 575 sf to 1,269 sf.

Litton says the additional appeal of the Baybrook Village asset is it boosts Harbor Group’s Texas portfolio. The company acquired the 518-unit Town Center Apartments at 2727 Ben’s Branch Dr. in Kingwood in May 2007. Later that year, the company joined forces with Houston investor Mosaic Residential Inc. to acquire the 259-unit Mansions of Shadowbriar Apartments at 12200 Overbrook Lane in Houston.

“We’ve been able to build a critical mass with acquisitions thanks to this,” Litton says. While there’s nothing else in the company’s acquisition pipeline at present, Litton says scouts are looking for investment opportunities in the Texas Medical Center submarket.

Russell D. Jones, vice president of Apartment Realty Advisors in Houston, says “this was a great deal” because Baybrook Village is in a fast-growing submarket. Jones, who represented the seller, says Harbor Group competed against 18 other bidders and won because it offered a certainty of closing.

Jones says Baybrook’s seller is in the process of spinning off a few properties and Harbor Group is in a buying mode. “They decided to capitalize on the opportunity,” he says. “They’d bought a whole lot of deals in the past 18 months and are recapitalizing so they ended up spinning a few deals out.”