Vizcaya Apartments
Vizcaya Apartments, a 312-unit apartment complex in West Houston/Katy built in 2004.
Location
The property is well-connected to employment centers in West Houston, with 82,000 jobs within a five-mile radius and 410,000 jobs within a ten-mile radius. This includes key areas such as the Texas Medical Center West Campus and the Energy Corridor. The property is also highly sought after due to its zoning within Katy ISD, the top-rated school district in the Houston MSA. Residents enjoy convenient access to 6.1 million square feet of retail, which is 97% occupied, within three miles of the property
Background
Built in 2004, Vizcaya Apartments is the perfect blend of relaxation and activity with its pet-friendly community, resort-style pool and a state-of-the-art fitness center along with its spacious one, two, and three-bedroom apartments for rent designed for modern living.
Units are around 996 sf and rent for $1500 on average.
Beginning in May 2024, LSC started tracking this deal. Pressure from equity led to the seller’s capitulation to sell. LSC became the buyer of choice due to two successful closings with the same seller in 2024 and ~$200M in transaction history with the Berkadia Texas Investment Sales team.
Since 2018, the owners of Cortland Vizcaya have completed ~$2M of major renovations, leading to substantial rental increases and 95% average occupancy over the past 5 years. LSC and its investors will take over a turnkey community with stable returns and minimal concern about major capital projects in the future.
Business Plan
For value creation, LSC will partner on their 12th deal with the Houston Housing Authority (HHA) to receive an 85% tax exemption. 20% of the units will be restricted to 60% AMI, 30% of units will be restricted at 80% AMI, and the remaining 50%will be leased at market rate. Proforma rents will decrease 4.8% due to rent restrictions, providing a defensive business plan.
104 units have been renovated with gray plank flooring, black granite countertops, pebble backsplashes, new cabinetry, and stainless-steel appliances. The remaining 208 units have classic finishes with high bar tops, earth tone granite countertops, brown tile backsplashes, espresso cabinetry, and black appliances.
LSC will push Other Income through the implementation of a bulk Wi-Fi package, generating $30/unit in net income.
7-year fixed rate debt provides the ability to hold for five years and exit the loan with no prepayment penalty.
