KINGWOOD, TX-A joint venture between Houston-based Asset Plus Cos. and institutional investors advised by J.P. Morgan Asset Management has acquired Harbor View Apartments out of foreclosure.
The JV is the first time the two companies have partnered, says Jeff Knowles, senior vice president with Asset Plus Cos., a local firm that third-party manages roughly 35,000 apartment and student housing units. “We like that J.P. Morgan has access to multiple capital sources,” he notes. “This is a one-off deal, but the intent is that we will do more deals together.”
The venture bought the 250-unit, class A community from Capital One N.A., which provided the construction loan for the project. Local firm Chancellor Development defaulted on the construction loan just before it finished the property. Capital One posted for foreclosure in April and foreclosed on the property in May after it was completed.
“This is a situation that I’ve not seen anywhere else in the market – a property that was completed but never leased up,” Knowles says “I’ve seen properties that went into foreclosure that were only half finished, but not one like Harbor View Apartments.”
Stabilized class A multifamily assets in Houston are trading from $85,000 to $95,000 per door. However, the Asset Plus-J.P. Morgan venture nabbed Harbor View Apartments at a discount. Knowles declined to say how much of a discount, but industry experts speculate that a distressed asset like this one would trade at 10% to 15% less than stabilized properties.
“The upside for this investment is our ability to come in and immediately open and lease a property that was completely empty,” Knowles tells GlobeSt., adding that the two multifamily properties across the street from Harbor View Apartments are completely full.
Located at 4855 Magnolia Cove Dr. next to Lake Houston and tucked into Kingwood’s Livable Forest, Harbor View Apartments is a four-story apartment community that features air-conditioned corridors, elevators and a direct access parking garage. “This is a very unique design that you would typically see in the Galleria submarket instead of Kingwood,” Knowles says, noting that Kingwood is a master-planned community established in 1970.
Harbor View Apartments offers a variety of floor plans are available including one, two and three-bedroom units. Units lease for $1.12 per square foot.
Asset Plus Cos. occasionally develops and invests for its own account, partnering with various equity sources. Harbor View Apartments is the first acquisition Asset Plus Cos. has made in more than 18 months.
“We had a couple of deals that we came close on, but couldn’t come to terms with sellers,” Knowles says. “Since we had access to capital on construction side and equity, but hadn’t been able to find deals, we started development of student housing earlier this year in Lubbock at Texas Tech University.”
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