KATY, Texas – Arizona-based MC Companies has acquired two adjacent multifamily properties totaling 648 units in Katy, west of Houston. The purchase was completed through the firm’s Katy 2 Opportunity Fund LP, with equity provided by MC Companies and its investors and acquisition financing arranged by MF1 Capital.
The two properties will be combined and rebranded as The Place at Barker Cypress as part of MC Companies’ proven value-add strategy. The firm will continue and expand the renovation program initiated by the prior ownership to improve unit interiors and common areas, targeting 328 of the 648 units for upgrades.
The transaction comprises the 384-unit garden-style Enclave at Cypress Park and the 264-unit garden-style Paramount Apartments. Both communities sit adjacent to each other along Barker Cypress Road, just north of Interstate 10 and roughly 20 miles west of downtown Houston, providing convenient access to regional employment centers and amenities.
“Closing this transaction speaks to our success and growth over the last 20 years,” said MC Companies CEO and Co-Founder Ken McElroy. “We appreciate this opportunity and are eager to close more deals of this caliber, as we pursue our goal of 25,000 units under ownership.”
CBRE arranged the asset sale and the acquisition financing for MC Companies. CBRE Capital Markets Senior Vice Presidents Clint Duncan and Matt Phillips represented the sellers, while Vice Chairman of Debt and Structured Finance Michael Thompson arranged the acquisition financing on behalf of MC Companies.
The acquisition lets MC Companies apply its renovation playbook to increase property value through targeted interior unit upgrades, finishes and amenity improvements, as well as enhanced landscaping and refreshed common areas. The planned improvements are intended to drive higher rents and occupancy by elevating the resident experience and modernizing older building stock.
The Houston multifamily market has been on a recovery trajectory this spring, with rising rents and stronger demand. A recent industry report showed a roughly 5 percent year-over-year rent increase for the Houston apartment market and an occupancy rebound, reflecting accelerated absorption and economic growth in the region. In June, apartment absorption in Houston remained above 5,000 units for the third consecutive month, and the area’s occupancy rate reached 90.7 percent, up from 88.4 percent the prior year.
MC Companies founders Ken McElroy and Ross McCallister bring more than three decades of experience in the multifamily investment industry. The firm continues to pursue both development land and existing properties suitable for value-add investment. MC Companies currently owns and operates more than 6,500 units across multiple markets, including Houston, Dallas, San Antonio, Phoenix, Tucson, Flagstaff and Tulsa.
Other Recent Apartment Transactions
Several other multifamily deals and financing transactions have also closed in the Houston area. CBRE Capital Markets recently arranged $100.25 million in acquisition financing for a four-property portfolio in the Westchase District totaling 1,330 units and roughly 1 million square feet. That portfolio was purchased by Westchase Houston LLC, a joint venture including principal Jade Laye; CBRE’s Capital Markets Debt & Structured Finance team facilitated the financing.
Separately, Lynd Co., a San Antonio-based firm, acquired two Houston-area communities: the 372-unit Paramount at Kingwood and the 312-unit Villas of Valley Ranch. The combined purchase price was $84 million, equating to approximately $122,807 per unit for the 684 units. A. David Lynd serves as CEO of the firm.
These transactions reflect a broader trend of investor interest in existing apartment communities that offer opportunities for renovation and rent growth as the Houston market rebounds.
July 8, 2021 — Realty News Report. Copyright 2021
For readers interested in Texas real estate, consider the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins.
File: Arizona Firm Buys Two Apartment Projects
Image: Courtesy MC Companies
File: (2) MC Companies. Scottsdale. Arizona Firm Buys Two Apartment Projects. Katy. CBRE Capital Markets. David Lynd. MF1 Capital. Ken McElroy. Ross McCallister.