CORPUS CHRISTI, TX-Locally based Apartment Commercial Services Inc. has sold the last of an 11-property, 1,773-unit portfolio that was brought to market in late 2012. The most recent sale involved five multifamily properties, totaling 836 units to a private Texas buyer.
According to Kent Myers, senior associate with Marcus & Millichap Real Estate Investment Services’ Austin office, the seller had owned the class B portfolio for quite some time. “It had been built up over 50 years,” says Myers, who with Marcus & Millichap senior associate Joe James and associate J. Patrick Burke, represented the seller in the transaction. “They liked the timing in the marketplace,” he says. “They had other ventures and wanted to free up some capital for that.” The buyer, in the meantime, will make improvements to the apartment complexes.
Myers says that six properties in the portfolio had been sold late last year, and that all the properties attracted interest from mainly high net-worth individuals and hybrid syndicates. He also tells GlobeSt.com that interest was high throughout the sales period; higher than what had been anticipated.
“It’s pretty rare to find a large family portfolio being offered in a secondary, or tertiary, market like this, though we’re seeing a large migration of capital into secondary Texas markets,” Myers tells GlobeSt.com. “There’s a perception that a lot of MSAs are overheated right now. People wanting yield are looking toward these markets, as they offer higher returns than can be found in Dallas, San Antonio or Houston.”
Because of this trend, Myers says professional investors are likely to gravitate to value-add opportunities in secondary markets. “They’re recognizing that they can go into Tyler or Longview (both of which are in Texas), invest $3,000 to $5,000 per unit in upgrades, then raise rents for a better return,” he says.
The apartments in the just-sold portfolio are:
- The 299-unit Briarcroft and Sky Harbor Apartments, 7218 South Padre Island Dr.
- The 74-unit Carmel Manor Apartments, 1001 Carmel Pkwy.
- The 107-unit Churchill Square Apartments, 4302 Western Dr.
- The 149-unit Fairway Apartments, 6440 Everhart Rd.
- The 207-unit Harper’s Corner, 6602 Everhart Rd.
The apartment complexes were built in the 1960s and 1970s and have an average occupancy in the mid-90s.