HOUSTON—The Gulf Coast area has an investment edge due to low interest rates and market dynamics tied to strong job and population growth. In particular, petrochemical and manufacturing booms are driving the demand for labor.
The strongest interest is coming from well-capitalized private buyers in US and often Mexico. Moreover, agency financing remains attractive for existing multifamily, according to ARA Newmark.
As the rent gap widens between new construction and well-located class-B and -C deals, investors are taking advantage with upgrade programs to achieving rent premiums. Some examples include recent sales in Victoria, TX and New Orleans, and a listing in Meridian, MS. Directors Brad Shaffer and Brandon Miller of ARA Newmark represented the sellers and sourced financing for the buyers in the two sales.
The Victoria Portfolio consisted of three assets totaling 544 units in South Texas Crossroads and the hub of the seven-county Golden Crescent. The buyer was HM Equity/Better World and the seller was Don Nelson. Ladder Capital provided the financing.
This portfolio was a key example of the void between class B/C properties and new class A as there was only one development built between 1983 and 2012.
“As interest in Louisiana and other Gulf markets heats up, premium assets can be elusive,” Shaffer tells GlobeSt.com. “Victoria also offered a rare opportunity to enter an established market with new-market scale as well as immediate asset diversification and limited direct competition.”
The Williamsburg Metairie Legacy Portfolio in New Orleans consisted of four assets in the Metairie submarket for total of 556 units. This was an opportunity to acquire a valuable portfolio in the area's strongest submarket. According to ARA Newmark, the portfolio drew 16 offers from local, regional and national investors.
The seller was Richard Owen and his family. Owens was the original developer in the 1970s of all four properties, which have never traded. The buyer was Audubon. Financing was provided by Resource.
“Our capital markets team sourced a bridge loan for the buyer, who already had a presence in New Orleans,” Shaffer tells GlobeSt.com. “The buyer plans interior and exterior upgrades to capitalize on growing rents and lack of new supply.”
The Magnolia Portfolio listing consists of three assets totaling 376 units in Meridian, MS. The assets were built between 1993 and 1995.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
