Summary

The Margot on Sage (formally know as Montierra) is an institutional-quality multifamily asset in fast-growing Houston, Texas, the fourth largest city in the U.S. We have partnered with The Bascom Group (“Sponsor” or “Bascom”) in the acquisition of this apartment complex located in the desirable Galleria/Uptown submarket, among the most desirable residential locations in Houston.

Cadre purchased this 346-unit property at a sharp discount to both the seller’s 2013 purchase price and the current replacement cost. We are attracted to this value-add opportunity which allows us to drive rent growth and reduce expenses through targeted capital improvements and the implementation of a locally experienced property manager.

Three Reasons to Invest in The Margot on Sage

Prime Submarket Location

The Margot on Sage is located in the Galleria/Uptown submarket, a desirable location with $100k median household incomes. Some of Houston’s most sought-after residential neighborhoods are in this submarket, including Tanglewood (median Redfin sale price of $2.21mm) and River Oaks (median Redfin sale price of $1.72mm).

Residents at The Margot on Sage benefit from nearby highways (I-610 and I-69) that offer easy access to nearly every major business center in the metro area. A wide variety of retailers are also located within walking distance. The Galleria, the largest shopping center in Texas, is a half mile away. The Galleria spans 2.4mm square feet and includes 400 stores and restaurants, two hotels, and three office towers, bringing in over 30mm visitors each year.1

Galleria/Uptown is the 14th largest business district in the U.S., with 28mm sf of office, 6.3mm sf of retail, and over 30 hotels.

Desirable Layouts at a Discount to Replacement Cost

The Margot on Sage is a mid-rise complex differentiated by large unit layouts and a concentration of 3-bedroom units. Amenities include a two-story fitness center, dry saunas with dressing rooms, a coffee/cappuccino bar, a structured parking garage with guest parking, and a gated community entrance with a gate attendant.

The cost of land in the Galleria/Uptown submarket has all but eliminated affordable, lower density, garden-style construction. No garden-style, multifamily properties of 100+ units were delivered within a five-mile radius since 2013, and none are currently being developed. This makes the purchase of The Margot on Sage, at a 43% discount to the replacement cost of new competitive projects in the submarket, a particularly attractive investment opportunity.

Experienced Repeat Partner

Cadre’s repeat partner, The Bascom Group, is a private equity firm based in Irvine, California, that specializes in multifamily, commercial, non-performing loans, and real estate-related investments and operating companies. Bascom has completed over $21.3 billion in multifamily value-add transactions, encompassing 355 multifamily properties and over 91k units since 2005. Bascom has been very active in Texas, acquiring 41 properties totaling 14.5k units, including 10 in Houston. Bascom ranks among the top 50 multifamily owners in the U.S.

Attractive Transaction Dynamics

Immediate Operational Cost Savings: Under previous management, leasing at The Margot on Sage has been reliant on locators and some short-term/AirBnB rentals (15 units/4.3% of the rent roll). We believe that both practices could either be reduced or eliminated. These changes, along with additional staffing efficiencies, are projected to lower payroll and leasing expenses.

The Margot on Sage

Underwritten Hold Period

4 years

Deal Details
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$25,000 minimum investment