Harvey-damaged Texas Medical Center apartment sold to Dallas-area S2 Capital – Houston Business Journal

Apartment fire neighbors thankful for quick firefighter response ...

A 1970s-era apartment complex in the Texas Medical Center that sustained damage to almost 30 percent of its units during Hurricane Harvey has been sold to Dallas-area firm S2 Capital.

Brompton Court will be the company’s third property in the Houston area, with plans to grow from about 2,000 units in Houston to 5,000 within 12 months, according to Scott Everett, managing partner at S2 Capital. The property’s name will change to The Weston, and renovations will take about 18 months, Everett said.

Everett wouldn’t disclose the amount paid to CMS Brompton Court for the three-story, 793-unit garden-style apartment complex. Mark Brandenburg with JLL arranged acquisition financing, and Voya Investment Management provided the loan. Apartment Realty Advisors represented the buyer and the seller.

S2 Capital, which launched in 2012, focuses on buying Class B and C apartment complexes to remodel.

“We’re heavy ‘value-add’ renovators,” Everett said. “We look for stuff with a bit of a distressed component.”

Usually apartment rents go up by $150 on average over a two-year period, Everett said. While he wouldn’t disclose the budget for Brompton Court renovations, he said a typical project that adds new countertops, backsplashes, lighting packages and stainless appliances cost about $10,000-$12,000 a unit, or about $8 million-$10 million. Brompton Court’s needs will be different due to flood damage, he said, requiring reframing of the first floor along with new sheetrock and HVAC units to be installed. The company has fully insured the property and sustained very little damage prior to Harvey, Everett said.

“It’s a little more extensive than we’re used to,” Everett said.

S2 Capital has around 17,000 units in Texas and Florida. Everett said in Houston there’s “a little bit of a vacuum of institutional capital,” but submarkets such as the Texas Medical Center are an appealing prospect, especially those submarkets that aren’t so energy-related. Also, with experts predicting an apartment supply shortage in 2019 and 2020 due to a lack of new projects that moved forward during the oil downturn, the timing seems right to Everett.

He said the company will likely hold onto the Houston-area properties for at least five years or longer, a sign that the company is bullish on Houston.

Largest Houston-Area Multifamily Developers

Ranked by Local Units Under Development

Rank Company Name Local Units Under Development 1 Trammell Crow Residential 2,020 2 Allied Orion Group 851 3 Hanover Co. 651 View This List

Source Article

Be the first to comment

Leave a Reply

Your email address will not be published.


*