Post Investment Group has acquired two distressed multifamily assets in Austin and Houston after the properties were transferred to special servicing and placed in foreclosure.
The Los Angeles-based firm told PERE the apartment buildings, totalling 738-units, were bought for a total cost of $40 million, including rehabilitation works, reserves and all fees.
The 300-unit Longhorn Station Apartments in Austin, was bought in partnership with a California-based asset management company for a roughly 40 percent discount after it was foreclosed on by its lender.
The 438-unit Serrano Apartments in Houston was acquired with private equity real estate firm NDC Capital Partners after the securitised loan was transferred to special servicers. Post president Jason Post said the Houston deal was bought for a discount of around 20 percent, with a “note carry back” after special servicers agreed to originate a new loan on the asset.
There is such low levels of deal flow that the few buyers that are out there are sometimes tripping over one another to get to an asset. Jason Post, Post Investment Group
There is such low levels of deal flow that the few buyers that are out there are sometimes tripping over one another to get to an asset.
Jason Post, Post Investment Group
During the annual fall conference of the Urban Land Institute last week, delegates were told that over the past month increasing numbers of buyers had started to target multifamily assets.
Post said deal flow for core assets was still at exceptionally low levels but the number of bidders had increased, with some deals attracting between 15 and 40 buyers. “It’s definitely competition. There is such low levels of deal flow that the few buyers that are out there are sometimes tripping over one another to get to an asset.”
Asset values though were still at least 20 percent off their peak, and often up to 50 percent to 60 percent, he added. Post Investment Group, which partners with private equity firms, institutional investors and high-net-worths to target value-add and opportunistic multifamily assets in Texas, acquired a 365-unit multifamily asset in Dallas in June with New York-based NDC.
Jack Ehrman, Post principal, added in a statement that the Austin and Houston deals represented a “discernible shift” in lender expectations in terms of the bid-ask spread. “Expanded consideration is now given to the active preservation of remaining equity in lieu of blindly pursing an exit at par, an argument we have been touting for some time,” he said.