Metro Volume and Pricing
No apartment investment transactions that fit Reis’ criteria closed during second quarter; only one was completed the quarter before.* Since the quarter ended, Kurtell Properties has acquired the 212-unit, 11-year-old Reserve at Autumn Creek property in Friendswood for $25.5 million, yourfriendswoodnews.com reported in July.
Since the quarter ended, the 161-unit Mirabella, GlobeSt.com reported in mid-August, is an example of a growing trend “in what’s becoming a very active multifamily sector.” “This was a Galleria submarket deal, which came with about a dozen qualified offers and boiled down to two or three that really wanted it,” stated a broker with Transwestern involved in the transaction. The buyer, Vende Capital, “was a local syndicator with a lot of equity and low leverage.” Noted the broker, “The previous owner had it for 20 years; the buyer came in, saw a value-add opportunity, executed strategy and put about $4,000-$6,000 per unit to renovate.”
Given the recent minimal sales activity tracked by Reis, all sums were small and most submarkets recorded no single-property transactions in recent quarters. Bear Creek/Katy led all other submarkets with 594 units traded over the past four quarters. Total dollar volume and mean selling price were $36 million and $59,764 per unit. Cypress-Fairbanks and Cloverleaf followed with 390 and 342 units sold, respectively, with dollar totals at $11 million and $33 million. At $96,491 per unit, Cloverleaf claimed the metro area’s highest average selling price.
Cap Rate Comparisons and Forecasts
Small numbers of single-property transactions have resulted in erratic quarterly average cap rate averages—and no averages reported for the four of the past six quarters. The 12-month rolling cap rate has been somewhat more consistent with respect to trend, declining overall over the past couple of years. While the 6.0% 12-month rate for second quarter, however, was unchanged from one and two quarters prior, it was down from 7.5% from the first quarter of 2011. The 12-month rolling cap rates for the Southwest and the U.S. markets per second quarter 7.0% and 6.5%.