Class-B 192-unit garden-style multifamily acquisition in the Houston Energy Corridor. Off-market deal sourced through a 12-year operator relationship; acquired below replacement cost with day-one cash flow and a clear value-add capex path on 38 vacant units.
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.
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.
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.
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.
| Tranche | Amount | % of Stack | Role |
|---|---|---|---|
| Senior Debt | $9.23M | 65% | Bridge-to-perm SOFR+295 |
| Mezzanine | — | — | Not required; DSCR clears 1.30× |
| LP Co-Invest | $3.98M | 28% | Two family-office tickets |
| Sponsor Equity | $0.99M | 7% | Dominion principal balance sheet |
No mezzanine; DSCR-cleared senior-only.
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Houston-based manager-operator focused on value-add multifamily in Texas Sun Belt submarkets. Long-standing Dominion relationship with a 12-year track record of repeat bridge-to-permanent refinancings.
Crescent Heights has executed two prior Sun Belt multifamily acquisitions with Dominion between 2022 and 2024, totaling roughly $28M in enterprise value across stabilized Class-B assets in Houston and San Antonio. Both prior deals closed on time, hit stabilized occupancy within 12 months, and refinanced into permanent debt on schedule.