Hamilton Point Investments ‘Goes Big’ in Texas with $450M of Multifamily Acquisitions

79
The Standard at Franz
Pictured: The Standard at Franz

Hamilton Point Investments (“HPI”), a real estate private equity firm, announced that it has acquired a four-property Houston apartment portfolio totaling 1,174 apartment units, which were built in 2022. The properties were purchased from a Texas-based multifamily developer for $195 million, which represents a cost per unit of $166,100. Three of the assets closed in late June and one closed in May.

HPI owns and manages multifamily properties, hotels, student housing, and manufactured housing communities. It raises its equity from accredited individual investors through their independent broker-dealer financial advisors, as well as from registered investment advisors in a series of closed-end real estate private equity funds.

The Houston portfolio includes Prose Champion in Houston, located at 6701 Farm to Market 1960 Road W and consists of 360 units; Prose Copperfield in Houston, located at 15255 FM 529 361 and consists of units; Prose Cypress Creek in Cypress, located at 12202 Huffmeister Road and consists of 240 units; Prose Franz in Katy, located at 24300 Franz Road, Katy and consists of 213 units.

The Standard at Cypress Creek
Pictured: The Standard at Cypress Creek

These recent acquisitions build on the firm’s recent push into Texas to capitalize on the significant multifamily pricing correction occurring in the state.

“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%,” said Matt Sharp, HPI’s co-founder and managing principal. “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.”

Hamilton Point calculates that strong population and employment growth will return these markets to stabilized equilibrium by 2026, at which point fundamentals should push values back into that $210,000 per unit range.

“Not much will be added to the market after this year, so growth will get things back on track,” added Sharp.

The addition of the new multifamily properties in Houston significantly expands HPI’s footprint in Texas and nearly doubles the total number of units it owns in the state. In total, the new acquisition brings HPI’s multifamily properties in Texas to ten, with more than 2,800 units owned in the state.

HPI existing properties in Texas include The Dakota in Victoria, Icon at Yorktown in Houston, The Strake at Grand Central in Conroe, Urban Oaks in Conroe, The Doral in Loredo, and the Bungalows at North Hills in El Paso.

“There is no arguing the growth and success of Texas. We’ve wanted to buy there for years, but pricing was too high and didn’t align with our disciplined basis focused investment philosophy. This correction is advantageous for properly funded investors who are able to hang tough for a couple years,” concluded Sharp.

Hamilton Point Investments LLC (“HPI”) is a leading real estate investment owner and manager with a portfolio spanning multifamily properties, student housing, hotels, and manufactured housing communities. HPI deploys capital raised through investment funds from accredited individual investors via a network of independent broker-dealers and registered investment advisors. Founded by J. David Kelsey and Matthew A. Sharp in 2009, the firm has acquired more than 150 properties for over $3.5 billion since inception.