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The Property
Allendale Arms Apartments is a 25-unit Class C property that is 100% occupied. It's located in a highly dense, blue collar part of Houston, TX. Properties in this part of Houston generally observe 100% occupancy. Houston is experiencing solid population growth and Hurricane Harvey has increased overall demand for apartments after people were displaced from their homes and apartments. Current owner is very hands off and let's the maintenance man take care of marketing, leasing, work orders, maintenance, etc. Due to the reliance on this person, this property is running far from optimal performance. Rents are under market. Expenses are not properly controlled. Three Pillars completed rehab on a similar property near by and achieved above market rents setting a new trend for competing properties to follow. Allendale Arms fits squarely in their area of expertise.
The business plan is to reposition the property by performing extensive interior and exterior rehab and put in a better tenant profile and increase rents. TPCG has it's own construction crew that will perform all rehab. They also have their own maintenance team to perform repairs and maintenance. This alone will result in a lot of savings on the repairs and maintenance line item. Furthermore, the water and gas bill can be lowered, as they did on their previous acquisition.
Live Updates/Timeline
1/10/2018: The deal was presented to Three Pillars the week of January 8th. LOI was sent same day as it fit rightly into their business model.
1/15/2018: Seller accepted the LOI from Three Pillars. The next update will be about the contract (Purchase and Sale Agreement) being executed by both parties.
1/21/2018: The terms of the PSA were finalized over the weekend. Most likely will be executed by both on Tuesday.
1/24/2018- Contract executed and submitted to title. Money will be sent to title company tomorrow.
2/1/2018- Inspection Day! Inspection went well. Normal condition for a Class C property where an owner relies only on a maintenance man. Plenty of opportunity to fix easy things and improve processes for smoother operations and lower expenses.
2/19/2018- Appraisal and ESA ordered. Insurance finalized. Working on closing.
Major Upcoming Deadlines
February 3rd, 2018- Final Key Principals Selected
February 24th, 2018- End of Due Diligence Period
March 24th, 2018- Closing!
Important Videos From All Involved In The Deal
Rehab Video
A glimpse into the previous project
Due Diligence Day
Inspection and Rehab Game Plan
Players Involved in Deal
Mortgage Broker: Nicholas Murphy, Berkadia
Lender: Bon Vuong, Allegiance Bank
Terms: 5.2%, 2 years interest only, floating rate, no amortization (it's an interest only loan for 2 years)
Construction Manager: Fernando Zamarripa, Three Pillars Capital Group
Maintenance Manager: Kent Herring, Three Pillars Capital Group
Nicholas Murphy
Associate Broker, Berkadia (Linkedin)
(Mortgage Lender)
Key Principals
Thanks to our strategic partnership with TPCG, we have agreed that they will allow up to 5 chosen individuals to be given the opportunity to be selected as Key Principals (KPs) on this deal. As those selections are made, they will be added here. This is the fastest way for the KPs to get a deal done, build their track record and credibility (read more on Become a Principal page)
We want to make sure that those individuals who are ready to do a deal done get a fair chance. The number of applications has been high, so we will help TPCG the best way we can.
Income Properties Portfolio
Allendale Arms Apartments
This page discusses all details pertinent to the deal and gives live updates about the closing process.
Josh Welch
Founder, Three Pillars Capital Group