Private Equity Group Scoops Up 4 Houston Complexes After ‘Pricing Correction’
Real estate private equity firm Hamilton Point Investments acquired a four-property multifamily portfolio that totals 1,174 units in Greater Houston.
Hamilton Point Investments purchased the properties from a Texas-based multifamily developer for $195M, less than they would have cost two years ago and less than they would cost to build today, according to a news release.
“The submarkets were heavily overbuilt over the last couple years resulting in increased vacancy rates and decreased effective rents which, combined with interest rate spikes, led to value reductions of over 20%,” Matt Sharp, HPI’s co-founder and managing principal, said in the release. “We’re buying new construction today in Houston for around $165,000 per unit that just two years ago was priced at $210,000 per unit and would cost maybe $190,000 per unit to build today.”
The properties include the 360-unit Prose Champion and 361-unit Prose Copperfield, both in Houston, as well as the 240-unit Prose Cypress Creek in Cypress and the 213-unit Prose Franz in Katy. The properties were built in 2022.
The purchase nearly doubles the number of multifamily units Connecticut-based HPI owns in Texas. The firm has six other complexes scattered throughout the Houston area, Loredo, El Paso and Victoria.
Including the newest acquisition, HPI has spent $450M on Texas properties since it started buying there 18 months ago, according to the company.
The firm is bullish on Texas but was waiting for the prices to align with “our disciplined basis focused investment philosophy,” Sharp said. While the correction has begun, strong population and employment growth will return Texas markets to equilibrium by 2026, HPI said in the release, adding that should push values back up to the $210K-per-unit range.
“This correction is advantageous for properly funded investors who are able to hang tough for a couple years,” Sharp said.
