Oaks of Cypress Station Apartments, renamed to Copper Lodge, consisted of 294 units, located in North Houston, Texas and was built in 1978. Unit sizes averaged 835 square feet. Buildings were two story construction with a combination of wood framing, stucco, and cedar siding. The buildings feature pitched, composition shingled roofs. All units were individually metered for electricity, had individual HVAC units, and feature washer and dryer connections.
Knightvest’s Houston Director of Acquisitions, Sean Clancy, pursued this property for 6 months prior to purchase. Capital expenditures had been inadequate which was evident in the poor condition of the exterior. Furthermore, the unit interiors feature dated flooring, fixtures, appliances, cabinets and countertops. The lack of capital reinvestment in the property was evident in the property’s rental rates, which were below average in the area, leaving room to implement a value-add program by upgrading the common areas, exteriors, and interiors to match its location and setting. The property was put under contract June 13, 2014, by Knightvest Capital of Dallas who has been Panther’s partner in a majority of our multifamily acquisitions. Panther FW Investments provided 90.00% of the acquisition total equity of $5,000,000.
Panther and Knightvest closed the acquisition on 1/8/2015. The portfolio was 89% occupied at time of purchase and had average in place rents of $674. The business plan included extensive interior and exterior capital improvements replacing cedar plank with hardi plank, exterior paint, new roofs, clubhouse remodel, pool renovations, landscaping improvements, covered parking repairs, and asphalt repairs. This was a value-add project with an anticipated hold period of 3 to 5 years.
EXECUTION AND SALE
The property sold in April 2018 exceeding economic projections.
This sale slightly exceeded our pro-forma projections providing a 1.77 multiple to Panther FW Investors and an annual average return on investment of approximately 20.62%.