A partially renovated Houston multifamily property is headed to auction, with bids starting at $34,000 per unit.
Beverly Hills-based Omninet Capital is auctioning Bellaire Oaks Apartments, a 711-unit apartment complex at 8900 Chimney Rock Road, built in 1966.
Bids start at $24 million. The property will be auctioned starting Feb. 24.
In the last two years, Omninet spent $8 million on capital improvements. But, more than half of the units still need to be upgraded. The property is being marketed as a value-add opportunity.
Omninet bought the property in 2021. It borrowed an undisclosed amount from Boston-based MF1 Capital for the purchase, loan documents show. Bellaire Oaks is located in Meyerland, about seven miles southwest of downtown Houston.
At the time of the purchase, it was valued at $42 million. It was valued at $57.2 million last year, a 36 percent jump over three years, according to appraisal district records.
There are two liens against the property, totaling about $250,000.
The tables turned on value-add multifamily developers when interest rates began rising in 2022.
Rate cap expirations put developers on the rocks after property values declined from their 2021 peak and construction prices spiked. As a result, assets that developers planned to fix up and sell at a premium are instead being sold at a discount. Others are going back to lenders.
Houston’s multifamily market has shown resiliency as it absorbs a historic amount of apartment supply. Occupancy rates and rents remained flat last year.
Industry experts are hopeful the tapering pipeline will allow rents and occupancy to rebound.
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