Skylar Point apartments is a 449-unit complex located along the city split line between Webster and Houston. This 1978 property has been extensively updated through the years with about 50% of the units receiving a variety of upgrade packages. The office, pool and gym areas have received a comprehensive update to bring it in line with other assets in the area. Though reasonable, the properties interior updating program, which has been successful, are of below average quality for the area and the decision to change the properties direction was made.

We phased our exterior capital improvements to include horizontal unit privacy fencing and bright exterior paint colors to provide a “gentrified feel” to the property. Additional exterior improvements have been carport lighting, the addition of a dog park, swimming pool and gym updates along with common area free Wi-Fi signal strength expansion to cover a large swath of the property. From our original budget of $700,000 for interior upgrades we were able to bring the cost down substantially through the use of in house staff and management oversight of sub contractors working on the property. We tailored our unit upgrades to include a modern “grey scale” design which follows our path of a more modern apartment feeling complex which in turn attracts a higher paying resident profile.

Revenue has climbed by $45,000 per month since early 2017 so we expect this asset is to be sold in the third quarter of 2019 for between $49-51 million dollars based on preliminary BOV’s from the local brokerage community.

Luxe at Katy (formerly Remington at Katy) is a 352 unit “A+” class property located in Katy, Texas which was purchased on October 31st, 2017 for $46,000,000. The property is a 2015 construction in a rapidly growing Katy submarket and currently maintains near-100% occupancy levels. The Remington was originally constructed with the intent to sell within 3 years of completion. During this process, priority by management was placed in rapidly getting full occupancy. Due to this, rents were not competitively adjusted to market rates in the area and concessions were relied on heavily to reach this target.

These management shortcomings are a major reason we believe the property is poised for great revenue growth in the near term using Newport RE Group management practices to boost revenue and customer satisfaction. In addition to streamlining expenses with the resources available to Newport RE Group the property will be rebranded to help justify rent increases which will cultivate a tenant-focused environment which will further reduce costs associated with tenant turnover. Using these strategic methods, we expect revenue to rise from $5,200,000 under current management to $6,300,000 by the third year of ownership.

The Trails at Lake Houston is a 304-unit class A+ asset located in the Generation Park master planned community in Houston, Texas. Purchased in April of 2017 at $41,000,000 for very close to the original construction cost. The property was completed in mid-2017 and managed to reach stabilized occupancy quickly thereafter due to superior construction and the increasing overall demand for housing in the North Shore, Houston submarket.

The Trails was originally built to sell within 2-3 years of completion but outside factors in the developing partnership forced its sale prior to the completion of the business plan. The developer’s plan would have included stabilization at market rent thus providing an opportunity for our partners to benefit from their partnership distress. This process has begun at the property and has been accelerated by tightness in occupancy as market fundamentals continue to be improved post hurricane Harvey.

The development of Generation Park, a 4,000 acre master planned development which began in 2013. Generation Park saw a dramatic expansion of companies moving to the area in 2017 after hurricane Harvey damaged large sections of the Houston market. No flooding occurred in the North Shore area and many companies impacted by Harvey in the Houston CBD are now reviewing their expansion plans in Generation Park. Generation Park’s list of current employers include TechnipFMC which is constructing a new campus to house their almost 3,700 Houston based employees and San Jacinto JC’s campus expansion. Additionally, the park was part of Houston’s unsuccessful bid to attract Amazons HC2 to the city as Generation Park is being developed with the lifestyle amenities coveted by today’s employers.

Chestnut Hill Apartments is a 460-unit apartment complex located in the Sharpstown section of Houston. It was acquired in August 2012 for $7,650,000 using $1,500,000 in equity as a foreclosure from LNR. At the time of acquisition, the property occupancy was 70% and the resident profile was under stress from a criminal element that was living at the property due to lack of security at the complex.

Our strategy was to first provide security for the property by repairing all the exterior fencing and common area lighting. The property also hired property security which included regular nightly patrols. This quickly led to the criminal element moving out and the property began attracting higher quality residents with the promise of a safer environment for their families. This change in the property resident profile coupled with a changing demographic profile in the marketplace, exterior property improvements and bi-lingual personnel provided a stable family environment to which local residents flocked to the asset. Rapid rental rate increases followed with the return to market occupancy allowed the property to increase revenue which stabilized to over $40,000 per month prior to the property sale.

The property was sold in June of 2014 after 22 months of ownership for $13,000,000. The properties performance far exceeded the original proforma and Chestnut Hill was sold for a realized profit to the partnership in excess of $4,200,000.

CP Waterfront was a 264-unit off market waterfront deal located in League City, Texas with an under utilized marina also bought as part of the property purchased in September of 2014 for $17,000,000 with an equity investment of $5,900,000. The previous ownership didn’t believe in investing in their asset so deferred maintenance onsite was extensive and needed repairs included exterior siding, new exterior paint, parking lots, landscaping updates, stairwell repairs, and new exterior windows, doors and the leasing office was also updated. We completely rebuilt the 53-slip marina which added to the properties appeal in the marketplace.

Our strategy was to reposition and rebrand the property from a “C” to a “B+” property using both an aggressive exterior rehab of the property that included the reintroduction of marina slips into the project. Cost of the rehab was just under $3,000,000 with a rental increase from $125-$300 per unit achieved at the property. Additionally, the boat slips added $12,000 in revenue per month to the property’s revenue stream.

The property was sold for $26,250,000 in November of 2016 after 25 months of ownership with the partners realizing a gross profit of $4,900,000.

This 158-unit property located in Pearland, Texas was purchased from a non-profit entity for $12,500,000 in October of 2014 using $2,500,000 in partnership equity. The owner/developer of the property was able to purchase raw materials without sales tax and was provided a property tax abatement during their ownership.

Additional gains were realized at purchase from the property being marketed by a residential Century 21 office. This allowed for purchase of the property far below market pricing at the time due to the inability of the seller to reach the audience willing to purchase the property and the asset sat on the market for 2 years prior to purchase.

The Pearland market also has tight zoning restrictions that limits supply which added to the allure of this property purchase. Although developed by a nonprofit entity the property had no formal LURA restrictions in place allowing for the immediate adjustment of rents to market rate after purchase. This abnormality significantly increased the speed that the asset was able to be repositioned.

The business strategy was to increase resident credit quality then improve the units interior to take the second step up the ladder of increasing revenue. Interior updates included new cabinets, granite counters, update lighting fixtures, flooring and color scheme update at a cost of less than $1,000,000 for about 30% of the units. These simple updates allowed the asset to raise the revenue from $120,000 per month to over $180,000 per month during the 30 months of ownership. Oakbridge was sold for $18,250,000. Our partnership realized a $5,400,000 net profit on our original equity investment of $2,500,000.

Commons on Edgebrook a 439-unit property located in Pasadena, Texas was purchased using the Auction.com website and closed in March of 2012 for $5,760,000 with partnership equity of $1,650,000 used to purchase the property which along with a construction draw component provided this asset with a smooth leverage path to successful completed project. We were selected the day after the Auction due to the original buyer choosing not to complete the sale at our original final offer price. The property was lender owned and 30% occupied at the time of closing and had suffered from years of neglect with more than 50% of the property units uninhabitable at the time of purchase due to issues ranging from electrical wiring and theft to missing appliances.

Our strategy was to repair the property as quickly as possible and bring the offline units to a rent ready condition using a combination of in-house employees and vendors to compress the process as quickly as possible. Within 30 days of purchase we were bringing 40 units online per month which the staff was able to lease quickly due to the demand for blue collar housing in the Pasadena market. Property amenities such as pools and security gates were also repaired and the project quickly became home to over 430 families. The repairs cost of $2,650,000 included the repair of 300+ units interiors, roofs, plumbing, electrical and foundations and was able to be completed in 16 months. The project achieved 95% occupancy in August of 2013.

The Commons sale closed on January 8th 2014 for $12,337,500 after 22 months of ownership and created a net profit to the partnership of $2,450,000.