Wilshire Place Apartments : Carmel Creek

Total number of units: 536

6000 Hollister Street
Houston, Texas 77040

PROPERTY DESCRIPTION

ACQUISITION PROCESS
Panther and ComCapp acquired Wilshire Place on February 16, 2016, for an all-in purchase price of $73,137 per unit. The property was built in 1982 and is located in northwest Houston along Highway 290. The plan for the property was to upgrade the common areas and a large percentage of the units in order to drive rent and NOI growth before ultimately selling the property in 5 years at a price of $92,551 per unit.

PROPERTY HISTORY
The property was able to pay distributions as planned, beginning in month 4 at a 6% couponin spite of a fire destroying one building shortly after takeover. That building was eventually replaced, enabling us to deliver newly upgraded units funded with insurance proceeds. Over the first 3.5 years of the hold period in-place rents grew from $764 to $917 (20%) while occupancy averaged 91-95%. Then, in late 2019, the property experienced significant tenant turnover and both the property manager and the regional manager overseeing the property were replaced. New management started in the spring of 2020 at the beginning of the COVID pandemic with occupancy at 83%. The new team worked diligently throughout the pandemic with a focus on collections, renewals, and new tenants. By the summer of 2020, occupancy began to improve, and rental rates began to slowly stabilize.

As a result of the disruption in late 2019, distributions at Wilshire Place were suspended since March 2020 and while operating results lag proforma, the momentum at the property improved in 2021.We witnessed significant investor interest for multifamily properties in the Houston area, where occupancy and rental growth across the MSA grew stronger than anticipated coming out of the pandemic.

EXECUTION AND SALE
Encouraged by the market strength and investor appetite in Houston, Panther and ComCapp marketed the property for sale on May 17, 2021, with a call for offers on June 23, 2021. The property received very strong interest and was ultimately awarded to El Ad Group, LTD for $104,478 per unit ($56,000,000). This price exceeded our original underwritten exit price of $92,251 per unit in year 5 but did not include a prepayment penalty (defeasance penalty) of $3.86 million ($7,207 per unit) for the early termination of the loan on the property, which offset some of the upside for this investment. At the time of sale, the property was 97% occupied and rental growth had resumed.

This sale exceeded our pro-forma projections providing a 2.0x multiple to Panther FW Investors and an annual average return on investment of 17.5% over the 5.7-year holding period.