The Harris Central Appraisal District assesses the complex at 1300 Gemini Ave. at $11.4 million. Comparable class A complexes have been trading for $20 million to $25 million. KC Venture Group LLC obtained a $17.2-million loan to buy the complex from Houston-based Morgan Group Inc.
"Palms is a newer asset and we bought it at a competitive price below replacement costs," says Peter Engleman, acquisitions director for the Kansas City, MO-based buyer. "We liked the location and the seller built a great asset."
Engleman tells GlobeSt.com that the upside for the value-add play will come from the management side. The 98%-leased complex has one- and two-bedroom units averaging 930 sf. The average rent is $1.05 per sf.
Engleman says KC Ventures is doing a reverse 1031 exchange to buy Palms at Clear Lake. It is putting properties in Texas and California on the market for the final leg of the exchange. Meanwhile, it is looking for more assets in Houston and other Texas markets. "We're looking very hard in Houston," he adds. "We think there's definitely opportunity, but nothing specific is identified right now."
Last year, KC Venture acquired the 192-unit Champions Centre Apartments at 13222 Champions Centre Dr. and 246-unit Champions Park Apartments at 13050 Champions Park Dr. Both assets represented repositioning plays.
CB Richard Ellis executive vice presidents G. Craig LaFollette and J. Todd Stewart and senior vice president M. Todd Marix, all in Houston, represented the seller. KC Venture Group used in-house representation.
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