Houston isn’t a new market for Gaia Real Estate. The New York City-based private equity group, founded in 2009, has owned a portfolio of 21 properties and more than 6,400 residential units in the city.
“Houston currently possesses some of the strongest supply and demand dynamics of all the high-growth Sun Belt markets,” Dave Kusy, partner and managing director of acquisitions at Gaia, told Multifamily Dive.
In December, Gaia expanded its Houston portfolio by acquiring Virage on Memorial, a 372-unit class A apartment project built in 2014.
Gaia acquired the property with its fully discretionary REIT, which had already purchased class A assets in Orlando and Nashville. Kusy called the market “very competitive” for Virage on Memorial.
The six-story mid-rise property sits less than 3 miles from downtown Houston, minutes from some of the city’s top single-family residential neighborhoods and within walking distance to Memorial Park and Buffalo Bayou, a river that flows through Houston.
“We love the location as it is proximate to many job centers, numerous parks and trails and nestled in a neighborhood with seven-figure homes where the rent-versus-own imbalance is favorable,” Kusy said. “Lastly, the property has good bones but hasn't been upgraded in 10 years. We love the upgrade potential and ability to execute a value-add business plan."
Virage’s amenities include a central courtyard with a pool and fire pit, grilling stations, 24-hour fitness center, dog park and a rooftop resident lounge.
"Gaia is modernizing the amenities, including an emphasis on what is important for tenants, such as work-from-home facilities, a state-of-the-art fitness center and improved package delivery system,” Kusy said.
Gaia’s REIT now has three properties with a total asset value of over $250 million. It plans to continue adding assets by buying in the Sun Belt and South Florida.
“We believe there is a short window of 12 to 18 months, and we will keep acquiring as long as we can buy materially below replacement cost and 2021 and 2022 peak values,” Kusy said.
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