SMC Holding obtained first mortgage financing of $9.6 million to acquire the class A, 200-unit complex at 5303 Atascocita Rd. in Humble. Michael Prakken, a director in LJ Melody & Co.'s Boston office secured the funding for Eagle Crest Apartments.
Prakken tells GlobeSt.com that a very select group of lenders was tapped for the loan. "The borrower wanted a lender with a program for secondary financing," he explains. The secondary financing program allows the borrower to put a second mortgage on the property after 12 months to recapture some equity. He adds most lenders do not allow for secondary financing.
Prudential Mortgage Capital Co., a Fannie Mae DUS lender, provided a 75% loan-to-value financing with a 10-year term at a fixed rate of 5.17% interest and 30-year amortization. The non-recourse loan is assumable with lender's permission, Prakken says.
Built in 1999, Eagle Crest Apartments is a located in the northeast submarket of Lake Houston/Kingwood. "This neighborhood has virtually no land left for multifamily development--that was one of the most appealing things about the property," Prakken says. The submarket also ranks first out of 39 submarkets in terms of occupancy.
Situated on 13.3 acres, the complex is comprised of 10 buildings featuring 81 one-bedroom units and 119 two-bedroom apartments. The one-bedroom units range from 656 sf to 706 sf and rent for $650 to $680 per month. Two-bedroom units, ranging from 874 sf to 1,054 sf, have $785 to $905 per month rents.
Eagle Crest Apartments currently is 93% occupied compared to the submarket's 95% occupancy. "Eagle Crest represented an opportunity because the property had been under managed," Prakken says. SMC Holding hired Houston-based Alliance Residential Management to lease and manage the property. David Wiley of Apartment Realty Advisors in Houston brokered the transaction.
According to Prakken, SMC Holding is looking for additional investment opportunities in the Houston market. "They feel confident about the multifamily market in Houston," he says.
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