Gautam Goyal has been eyeing distressed acquisitions for a while. With the purchase of the 426-unit Chateaux Dijon Apartments in the Galleria section of Houston, the CEO of Three Pillars Capital Group said he was able to achieve this goal.
In May, Houston-based Three Pillars purchased the property from Austin-based owner InvestRes, which acquired the property in 2018.
“The seller's loan was due in June and they were unable to refinance due to the fact that they didn't grow income,” Goyal said. “They could have refinanced, but they would have had to put money in.”
Multifamily Dive reached out to New York City-based brokerage firm Global Real Estate Advisors, which handled the transaction, and InvestRes to verify that the sale was forced. Neither firm responded to our email.
Goyal said Three Pillars had the option to finance the deal with money from a debt fund or a bank. It chose to utilize a loan from Lubbock, Texas-based City Bank.
Three Pillars has extensive remodeling plans for the community, which has a mix of one- and two-bedroom units. “We will spend millions of dollars on renovating it and adding significant value through interior renovations,” Goyal said.
The Chateaux Dijon Apartments, where GREA said former President George W. Bush once lived, has an amenities package that includes a pool, fitness center, business center, outdoor grilling and dining areas, package lockers and a pet park.
“Chateaux Dijon is one of the most historic and recognizable apartment properties in Houston,” Jordon Emmott, co-founder of GREA, said in a press release shared with Multifamily Dive. “The architecture was simply way ahead of its time and I am excited to see the asset being revitalized.”
Over the past year, Goyal has been raising money in anticipation of grabbing distressed apartments from troubled owners. Three Pillars, which has a portfolio of more than 3,000 units, announced in late February that it secured a commitment of $300 million over the past 12 months to purchase value-add Class B and C communities and distressed assets.
The firm is targeting $1 billion in acquisitions in its current markets of Texas and Oklahoma. It is also eyeing expansion into Arizona, Florida, Georgia and the Carolinas. Three Pillars received funding commitments from family offices in the U.S. and the Middle East and high-net-worth investors in the U.S.
“As time goes on, we’re going to see more of those become available,” Goyal said.
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