Bluerock Residential Growth REIT Inc. has recently acquired the 384-unit multifamily Villages of Cypress Creek Apartments in Houston. BRG purchased an 80% interest in the Cypress Creek property in an off-market transaction with an equity investment of $14.5 million, financing the remainder with a fixed-rate loan of $26.2 million.
The company, which will implement a $2-million renovation program to upgrade units and common spaces, projects the acquisition will yield a pro-forma stabilized cap rate of nearly 7%.
Located within the Cypress/Fairbanks submarket of northwest Houston, Cypress Creek is a quiet garden community with ample floorplans and surface parking typical of lower density, suburban locations. Built in 2001, the property features one-, two- and three-bedroom units averaging 975 square feet, two resort-style pools with barbecue area and gazebo, fitness center, game room with billiards table, business center with Wi-Fi, and a dog park. The property, which was not damaged by Hurricane Harvey, was nearly 94% occupied as of September 20, 2017.
The Cypress submarket, located 30 minutes northwest of downtown Houston, is among the 50 highest-income areas in the US, with average household incomes 26% higher than the greater Houston MSA and a median single-family home price of $315,000. The property attracts superior tenant demographics given its location within the Cypress-Fairbanks Independent School District, which is among the top 10 in Houston, and also benefits from its proximity to sizable employment centers including an 855,000 square-foot Amazon fulfillment center, now under construction. When complete, the center will accommodate more than 2,500 full-time employees.
“BRG was able to leverage its deep operating partner network to complete this transaction. We are confident that, with enhancements in place, Cypress Creek will be capable of generating strong revenue as well as solid net operating income growth, making it a sound performer for the REIT,” said Ramin Kamfar, Chairman and CEO of BRG.