Multifamily Continues to Shine in Sunbelt Cities

HOUSTON—Despite the challenges brought on by COVID, multifamily continues to shine in major metros such as Houston. Three Pillars Capital Group recently acquired the 256-unit Westridge Gardens and 364-unit Mainridge, two late-1970s vintage properties located a half mile apart in the fast-growing Medical Center South submarket.

Electra Capital originated a $43 million acquisition/bridge loan on behalf of Three Pillars. Gryphon Real Estate Capital Partners LLC provided the senior mortgage of $35 million, while Electra Capital retained an $8 million mezzanine loan.

This $43 million transaction marks the third loan that Gryphon and Electra have recently closed together. Gryphon will be the asset manager for the senior loan portion of the bridge loan.

The bridge loan from Electra will allow Three Pillars to significantly upgrade the exteriors and interiors of the properties, improve common areas and recast the properties through attentive management and a focus on providing value for tenants.

“Value-added multifamily properties in Sunbelt cities like Houston are continuing to benefit from an influx of residents from other high-cost-of-living states and densely populated cities,” says Samuel J. Greenblatt, CEO of Electra Capital. “This loan gave Three Pillars the opportunity to build its portfolio with two ideally located value-add properties and the capital needed to execute on its renovation plan.”

Located at 2501 Westridge St., Westridge Gardens was built in 1979 and offers one- and two-bedroom units ranging from 670 square feet to 900 square feet. The gated pet-friendly community offers a pool, laundry facilities and a fitness center. Mainridge, also built in 1979, is located at 2600 Westridge St. and offers one- and two-bedroom units starting at 691 square feet up to 997 square feet with similar amenities. Both communities have access to Interstate 610/Alternate 90/Highway 288, and are in close proximity to NRG stadium and Texas Medical Center.

“Multifamily properties will remain as one of the most sought-after product types in CRE despite some of the economic challenges affecting major markets,” Greenblatt tells GlobeSt.com. “The demand for flexible capital will play an integral role for investors who are navigating the situation, providing them with solutions that complement portfolio objectives and facilitate value-add acquisitions.”

Derek Fasulo, vice president with CBRE Houston, arranged the financing.

This is the second sizeable bridge loan Electra has provided in the past month. In October, Electra closed on a $94 million bridge loan for Four West Las Olas, Elevate Partners’ new luxury apartment tower in downtown Fort Lauderdale.

Leasing activity picked up measurably during the third quarter as social distancing measures loosened despite the ongoing pandemic, according to a third-quarter report by Transwestern. As such, metrics across the multifamily sector received a boost, led by strong positive absorption. More than 5,000 units were absorbed during the period, up 150% year-over-year, says the report.