New Owner To Give Facelift to Ailing Baytown Apartments

BAYTOWN, TX-A private investor and first-time buyer from Westminster, CA is hoping to breathe new life into the ailing, 75-unit Shady Hollow apartments here, a suburb located about 26 miles east of Houston’s CBD.Shady Hollow Investments LLC grabbed the complex from over a dozen other buyers and plans to sink about $2,000 per unit, or over $150,000 into renovations, Jeff Eisenhardt with the Houston office of Hendricks & Partners tells GlobeSt.com. The work will begin soon, he says, and will consist of a phased replacement of roofs, siding, paint and other cosmetic work.Eisenhardt says the complex has been on and off the market with different brokers for several years. The property had been on the market for eight months in 2002, sat idle in 2003 and finally in January 2004, Eisenhardt and his team made a big push to get the property sold. Shady Hollow had an asking price of $1.6 million, and according to Eisenhardt, “it didn’t sell for quite that much.”At the closing, the 90% occupied complex, which sits on just under three acres, had a 10% capitalization rate. Keith Van Arsdale with the Houston office of BMC Mortgage arranged new debt for the project through LaSalle Bank of Chicago, explains Eisenhardt. This was a difficult proposition, he adds, because the sellers, Dongsi and Zhenling Zhang of Baytown, had only limited operating data. The lack of information combined with the physical condition of the building made the entire process challenging, he says. However, the one big attraction at the complex, says Eisenhardt, was its location on Garth Road, a prominent fairway in the city.The new owner plans to keep the current tenants in place while the renovations are completed. Currently the average lease rate is 60 cents per sf, which according to Eisenhardt is up to 5 cents per sf less than competing properties. After the remodeling, Eisenhardt expects the owner will be able to bring rents up. The average unit size is 741 sf.