Crescent Heights Multifamily

Sourcing & Thesis

The Crescent Heights deal came off-market through a 12-year relationship our team has maintained with the Houston-based operating partner. The seller was an institutional REIT trimming Sun Belt exposure; rather than list, they reached out to two long-standing capital relationships first. Our ability to underwrite the asset in five days and issue an LOI inside two weeks is what closed the gap against a competing bidder from a national multifamily fund.

Pricing cleared at roughly 6.4% going-in cap on in-place NOI — about 250 basis points wide of replacement cost on a per-door basis. Houston Class-B was pricing 50–80 basis points wider than DFW for sound structural reasons, and Crescent Heights sat inside the value-reversion window our thesis depends on.

Structure

Capital stack: 65% senior debt from a Houston-based relationship bank (local origination, agency takeout at 18 months), 28% LP co-invest pool sourced through two family-office relationships, and 7% sponsor equity from the Dominion principal balance sheet. No mezzanine — the deal didn't need it, and we avoid mezzanine wherever DSCR clears 1.30× on senior-only.

• Senior debt at SOFR + 295 bps, 5-year fixed after 24-month bridge
• Two-family office LP tickets at $2.0M each
• Operator rollover: 100% of property management retained with a 3-year management agreement and KPI-based incentive fee
• Capital improvements budget of $1.6M for the 38 vacant units, prioritized on rent-ready turn within 90 days

Value-Add Path

The 38 vacant units at acquisition sat mostly in original-condition interiors. Our operator-led capex plan: targeted interior upgrades (LVP flooring, quartz tops, fixture packages) at $4.2K per door, utility-billing recovery rollout across all 192 units, and a concession-burn plan to push trailing effective rents back toward market by month six.

The Energy Corridor submarket fundamentals supported the underwrite: 18,000 trailing net absorption across DFW + Houston, employer base anchored by Exxon, BP, and Schlumberger headquarters operations, and a Texas-anchored debt market comfortable writing sub-$15M bridge loans to repeat sponsors.

Outcome

Eleven months in, Crescent Heights was stabilized at 94% occupancy. We refinanced into permanent debt at +250 bps spread compression against the original bridge rate. The LP base received an 8.2% current cash distribution on equity, and the asset is positioned for an exit trade into the institutional buyer pool as stabilized Class-B Houston trades compress.