Westchase 3 Portfolio

Houston, TX

  • Target Annual Cash 8%
  • Target IRR 19%
  • Target Equity Multiple 1.66x
  • Asset Profile Value Add
  • Min. Investment $25K
  • Estimated Hold 3-5Y
ValCap Group Dallas, TX

Multi-Family Property

About this Property

The Westchase Portfolio consists of 1,331 class C+ units spread over 3 assets: The Westchase Grand with 556 units, Westchase Preserve with 468 units, and Westchase Estates with 307 units. The Portfolio’s proximity to many of Houston's top employment centers and the Westchase District’s long-range, city sponsored, revitalization plan uniquely positions these assets in the path of redevelopment which corresponds with higher rents available to the property owners willing to invest in their assets to capture these increases. The managing members are offering qualified investors the opportunity to acquire an interest in the Westchase portfolio by purchasing a membership interest in "GPE 1331 - MEZZ" Texas limited liability company (the LLC). The LLC has already closed on the deal as of July 25th, 2018.

The properties, which were completed in the early 1980's, have seen consistent rent growth in the market over the last several years despite the current ownerships unwillingness to reinvest in their asset. Several properties in the immediate area including Elements, The Edison, and The Cove all have undergone exterior rehab and amenity updates similar to our business plan and have seen their rents jump almost 15% post rehab. The ValCap Group has consistently planned and executed similar business plans in Houston since 2012, which have all produced 25%+ IRR returns for our investors.

Westchase District Facts:

  • 1,500 Businesses
  • Fortune 200 Companies: 9
  • 81,000 Employees
  • 4.2 Square Miles
  • 500,000 People Live Within 5 Miles
  • 23 Hotels with Over 3,000 Rooms
  • Over 18 Million Square Feet of Office Space
  • Over 1.67 Million Square Feet of Retail
  • 2 New Parks Under Development

ValCap's business plan includes a rebranding of the assets, unit upgrades, and potentially the construction of a new leasing office on a portion of The Westchase Grand. In addition, a major overhaul of the security systems and gates along with lighting and parking lot improvements will take place early in the process thereby making the residents feel safe and secure when they arrive at their upgraded apartment home(s). The common areas amenities at each asset will be improved including a major update of the offices, pools and gym areas. The ValCap Group will continue to increase credit and resident quality standards to strive towards delivering a great and safe place to live by using our wealth of knowledge in the Houston market. Our belief in superior customer service, including the building of a community through property events, leads to having long term residents. This is also central to our business plan and allows for cost mitigation by decreasing unit turnover. Zero based budgeting and cost mitigation through more thoughtful planning will lead to continued NOI growth throughout the planned 3-year ownership on the asset. Using these strategic methods, we expect to grow the net operating income of the assets from the current $6.2MM to about $8.6MM.

The ValCap Group is raising approximately $12,300,000 in equity to fund the purchase of the Westchase Portfolio. The sponsor (Richard Fishman) has put up half of the required equity in the deal himself, about $6,000,000. We have raised an additional $4,200,000 of investor money and prefer to fill the remaining $1,800,000 of equity with additional investor money. The target term of the investment is approximately 3 years, subject to market conditions.

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Key Points

  • Value-Add Upside: Approximately 47% of the unit interiors have been upgraded from a “standard” to an “executive” level, which includes black appliances, resurfaced cabinets, resurfaced countertops, wood plank flooring, brushed nickel hardware, ceramic tile backsplashes, additional ceiling fans and larger baseboards in the living/dining areas. Executive level units are receiving a rent premium of approximately $100 per month. Under our ownership, we plan to continue and even expand this upgrade program, as well as enhance some of the communities’ amenities.
  • Strategic West Houston Location: All three properties are located within the highly regarded Westchase District, the commercial and cultural heart of West Houston, which was created in 1995 and has over 1,500 businesses and 81,000 employees working within the District’s 4.2 square miles. The Westchase District’s Long-Range Plan for future development will continue to attract investors and increase economic value throughout the District with their focus of improvements in mobility, beautification and public safety.
  • Opportunity to Increase Occupancy: Overall occupancy for Class B properties in the submarket is 92.6%, while the average occupancy across the portfolio is approximately 90%. We have the ability to increase occupancy and subsequently revenues through additional management and operational efficiencies. We have found that these properties have suffered from neglect and poor management. By implementing our ValCap Way of management, we plan to create a safer, more vibrant, community that residents will be proud to call home.

Financials

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Offering Financial

Location Details

Houston, TX

Westchase Estates has excellent accessibility to all of the major transportation thoroughfares in West Houston including Beltway 8 (1.6 miles), the Westpark Toll way (2.6 miles), I-10 Katy Freeway (3.2 miles), and Westheimer Road (0.2 miles). Located within the Westchase District, one of the largest employment centers in the city, residents are just minutes away from the over 1,500 businesses employing over 81,000 people within the District. In addition, the Energy Corridor (5.0 miles) is home to 300 international, multi-national, national and local companies with over 94,000 employees in nearly 19 million square feet of Class A office space. By 2030, office/mixed-use space is expected to reach 45.2 million square feet. Uptown Houston is just over seven miles from the property and is the 15th largest business district in the U.S. ahead of the cities of Portland, Phoenix and Atlanta.

Houston Community College’s Alief Hayes Road Campus just recently opened their new West Houston Institute (0.2 miles), a 112,000 square foot campus focusing on STEM (science, technology, engineering & math). In addition, the existing building on Hayes Road has added a brand-new Entrepreneurship Center and Film Making program facilities.

The property’s location just north of Westheimer provides residents access to the multitude of grocery, shopping and dining options available along the popular east-west thoroughfare. Grocery options within 2.7 miles of the property include Whole Foods Market, H-E-B, Kroger, Trader Joes, Walmart, and Target.

The Westchase District’s “Westheimer Streetscape” project will improve the sidewalks and street landscaping along Westheimer Road for approximately 3.5 miles from Kirkwood Road east to Westerland Drive to enhance the pedestrian environment and retail experience. Final design has been completed with construction scheduled to begin in December of this year. Budget for this project is $16 million.

West Houston is a shopping and dining paradise with both traditional mall and open-air developments just minutes away including City Centre (3.7 miles), a mixed-use development with European-style open-air plazas and beautifully designed green spaces with a multitude of dining and shopping options, the Hotel Sorella, Life Time Athletic and Studio Movie Grill. Town and Country Village (3.3 miles) has over 90 retailers including national brands and local boutiques, as well as fine and casual dining options. Memorial City Mall (5.2 miles) is a super-regional mall with over 1.7 million square feet anchored by Macy’s, Dillard’s, Target, JCPenney and Sears.

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Documents

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Offering Agreement Documents

Frequently Asked Questions

Below are some of the most frequently asked questions about this offering.

The funding deadline is October 31st, 2018.

The first projected distribution is scheduled for January 2019.

Distributions are scheduled to go out on a quarterly basis.

Yes, non-US residents are welcome to apply. Please contact the sponsor for more details.

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