The Verge at Summer Park

The Verge at Summer Park consists of 291 apartment units across 14.8 acres, consisting of 12 three-story residential buildings and clubhouse and leasing center. The Property is in the master planned community of Summer Park, near the Brazos Town Center in the City of Rosenberg, Fort Bend County, Texas. The development ready, fully entitled 14.8 acres fronts a tranquil lake in the commercial center of Summer Park.

The Verge at Summer Park is conceived as an upscale residential rental complex for professionals and families that want to take advantage of secure, carefree living in an amenity-rich environment. The project is sited on a prominent parcel overlooking a beautiful lake inside a highly desirable master planned community. In addition to the wealth and diversity of on-site recreational and social activities, nearby medical and dental clinics, multiple retail and food-service options, and a variety of lifestyle services are all available within close distance of the community.

The Verge at Summer Park’s unit mix features 177 one-bedroom units ranging from 774 square feet to 923 square feet, 96 two-bedroom units ranging in size from 1,149 square feet to 1,284 square feet, and 18 1,429 square foot three-bedroom units (see Table 1). Interior amenity spaces within the clubhouse area abound, and total approximately 5,500 square feet. Those indoor amenities include a lobby, fitness center, yoga room, TV room, community room with kitchen, business center, and mail and package room. Outdoor amenity and recreational areas total approximately 5,000 square feet, and features a large swimming pool, pool cabanas, outdoor kitchen and bar, and multiple lounging areas. Nearly 25% of the property’s units have unimpeded views of the lake.

Rosenberg, TX

The Verge at Summer Park is located east of Park Place Boulevard and North of August Green Drive in the master-planned community of Summer Park, in the City of Rosenberg, Texas. Rosenberg is located within Fort Bend County, one of the fastest growing counties in the country. The City of Sugar Land, the largest city in Fort Bend County and the third largest city by population and second largest by economic activity in the Houston MSA, is less than 10 miles away. Fort Bend County has experienced explosive growth over the past fifty years. In 1970 the estimated population was approximately 52,000 people. By the 2010 census, the population had increased tenfold to approximately 585,000. The 2020 census determined that Fort Bend County was the 8th fastest growing county in the U.S. with at least 100,000 residents in the country. The Fort Bend population increased by 40.6 percent between 2010 and 2020. Rosenberg also experienced double digit growth over the past fifty ears and has nearly doubled in population since 1990. The estimated 2019 population Rosenberg and Richmond is 50,885.

Summer Lakes and Summer Park are adjacent communities that offer high-quality single-family residences providing comfortable lifestyles for growing families in Rosenberg. Each community has been carefully designed around man-made lakes, with numerous lake front sites available. Single-family homes start in the $230s, and range in size from 1,500 to 4,000 square feet. Summer Park is the smaller of the two communities and is the only one that contains multifamily sites, of which The Verge at Summer Park is the last, of four total, remaining.

The Verge at Summer Park’s location adjacent to Rosenberg’s town center provides its residents with ample retail opportunities within a short distance. Services include medical and dental clinics, big box and traditional retail, restaurants, gas stations, drug stores, and supermarkets. Most notably, nearby Brazos Town Center (see Aerial 1, below), ranked 30th among the top 50 largest shopping centers in the nation, integrates approximately 100 acres of retail anchored by multiple big box stores, including Target, Home Depot, Kroger and Academy. The 650,000 square foot retail center is conveniently located within walking distance of The Verge at Summer Park. Along with big box retail, Brazos Town Center also contains services such as salons, medical and dental offices, hotels and auto-related services such as an AutoZone. Finally, there are over thirty pad sites that offer food-related services as well. These include traditional fast food such as McDonald’s and Chick-Fil-A to sit-down restaurants such as Texas Roadhouse and Panera Bread.

The Verge at Summer Park’s location in southwest Houston benefits from its strategic positioning within proximity to major regional arterials including Interstate 69 / Highway 59, Beltway 8, the Grand Parkway (SH 99) and US Highway 90 Alternate. The regional highway system provides the Property with convenient connectivity to Houston’s largest employment centers and delivers excellent access to surrounding regions and attractions. Further northeast on I-69 are multiple employment centers including the Westchase District (21.7 miles away), the Texas Medical Center (26.8 miles), the Energy Corridor (31 miles) and Downtown Houston (31 miles). The Westchase Business District is home to over 1,500 businesses including large companies such as Honeywell, Phillips 66, and National Oilwell Varco. The area contains many engineering and construction companies, including Jacobs Engineering, Hoar Construction and D.E. Harvey Builders. Over 81,000 employees work within Westchase. The Texas Medical Center is the largest medical center in the world and employs over 106,000 employees, including 20,000 physicians. Over 225,000 employees work between the Energy Corridor and Downtown Houston. Downtown is Houston’s central business district with over 3,500 employers and over 150,000 employees. BP America, ConocoPhillips, and Shell Oil Company are the major players, among other smaller businesses, which comprise the employer profile in the Energy Corridor. The Energy Corridor has approximately 300 businesses, employing over 78,000 employees.

Houston Demographic

Houston remains an attractive market for real estate development and investment due to its business-friendly environment, its prospects for additional growth and its overall affordability. The Houston MSA is the fifth largest in the US, and over the past decade has been a national leader in population and employment growth. Between 2010 and 2020, Houston added nearly 1.2 million residents. Only Dallas-Fort Worth and Phoenix added more.

Like the rest of the United States, Houston not only felt the impact at the depths of the coronavirus pandemic but is also experiencing an exuberant positive trajectory in employment and median household income growth since the beginning of 2021. Houston lost an estimated 360,000 jobs between February and April 2020, however through the end of Q2 2021, the city has recovered 180,000 jobs. According to CoStar, Houston’s employment is projected to return to pre-pandemic levels in the summer of 2022. A surprising bright spot was Houston’s attractiveness to tech workers. Houston was the second most popular destination, behind Miami, for migrating tech workers during the pandemic. While Houston’s tech scene has been gaining momentum over the past decade, the inflow of workers to Houston increased 10.4% compared to the prior year.

Despite the pandemic, the last twelve months have flashed signs of strength in the Houston Multifamily market and have now reached a tipping point. According to ApartmentData.com, absorption between July 2020 and June 2021 was 27,759 units. Some estimates put the absorption figure closer to 30,000 units. Regardless, net absorption reached its highest level on record over the past twelve months, compressing the vacancy rate by approximately 100 bps. Incredibly, according to the Greater Houston Partnership, Houston absorbed 12,355 units between March 2021 and May 2021. This figure is nearly equivalent to the average annual absorption rate of 13,050 units.

The diagram below shows the Hockey Stick shaped growth in effective rents and occupancy levels that has begun to materialize in the Houston market in early 2021. According to the Greater Houston Partnership, the rent growth story is incredibly strong. Average Class A rents in March were $1,465 per month, and have risen to $1,542 as of early June, representing a 5% increase in the span of only 3 months. Class B rents increased to $1,078 per month, up from $1,032 per month in March. During the pandemic, according to Diagram 3, rents were flat or slightly declining and had been in this anemic state for over two years. Decreasing concessions, whether that translates into free rent, deposit waivers and/or floorplan upgrades, are driving rents up as well. According to the Greater Houston Partnership, 50% of all units had concessions in fall 2020. However, as of July 2021, the percent of units with concessions fell to 42% of units.

Market Comparables

Our Sponsor(s)

In May 2021, Buckhead principals Kevin Kirton and Matthew Morgan approached Jay Rippeto, Juniper CEO, regarding the Project. The three had been acquainted socially for years and have been working on an urban infill multifamily project in The Woodlands for over 2 years. Buckhead sought a co-general partner to support the equity raise and to provide financial backing for the proposed $51,700,000 development.

In 2013, Buckhead developed Waterford at Summer Park, a 196-unit Class Apartment project in Summer Park - at the time a fast-growing but relatively newer master planned community in Fort Bend County. After a highly successful development process and a fast and efficient lease up, Buckhead sold the project in 2015, achieving significant financial return. Since then, Waterford has continued to perform well in terms of rents and occupancy.

After several months of negotiations, in March of 2018 Buckhead purchased approximately 14.8 acres adjacent to Waterford at Summer Park from Sam Yager Inc., the owner and master developer of Summer Park. Summer Park has since been acquired by Starwood Capital. During 2018 and 2019, Buckhead retained and worked with a select group of consultants to design The Verge at Summer Park. Also in 2019, Buckhead and Sam Yager worked to address and solve several development-related issues, including drainage and wet detention pond configuration and location, among others. The project design and construction documents were finalized at the end of 2019. In the first months of 2020 Buckhead competitively selected a general contractor and secured a construction loan and a preferred equity investment, both of which remain committed for the project.

In March 2020, faced with severe restrictions and uncertainties due to the pandemic lockdowns and concomitant economic recession, Buckhead decided to postpone the project. In February and March of 2021, after the pandemic restrictions were lifted and the economy started to quickly recover, Buckhead re-engaged its general contractor to reprice the project towards the execution of a guaranteed maximum price contract. However, a highly unexpected and sudden increase in the price of lumber affected the construction markets and created a large increase in the construction budget. Buckhead evaluated the situation and decided again to postpone the project, given its assessment - now proved correct - that the lumber markets were poised for a significant price correction.

Currently, The Verge at Summer Park is fully designed, value-engineered and ready to obtain a building permit and break ground. Critical preliminary site work has been completed, which saves two or three months of work. The construction loan and preferred equity investment have been secured and documented.

Matthew Morgan President, Principal of Buckhead Investment Partners   Matthew Morgan is the President and Principal of Buckhead Investment Partners, which he co-founded in 1996. Mr. Morgan has led the firm as President since 1996, developing an extensive and unique knowledge of multifamily lending, multifamily development and management. He started his career as the founder and manager of two successful residential and commercial construction firms, completing projects in Houston, Atlanta, Connecticut and New York. Mr. Morgan also served as Marketing Director for KRERC, developing and marketing real estate statistical databases. In 1989 he joined Funding Incorporated, now Johnson Capital Multifamily, a FHA and Fannie Mae-approved multifamily lender, first as a Vice President and later as President and shareholder in the firm. He is a licensed real estate broker in the State of Texas. Mr. Morgan received a BA in English and a BS in Economics from Vanderbilt University.

Kevin Kirton CEO, Principal of Buckhead Investment Partners   KevinKirtonis the CEO and Principal of Buckhead, which he co-founded in 1996. Mr. Kirton is also CEO and founding principal of Funding Incorporated, now Johnson Capital Multifamily, a FHA and Fannie Mae-approved multifamily lender which originates, funds and services multifamily mortgages nationwide. Before founding  Buckhead, he served as Manager of Commercial Lending for Main Street Mortgage, a subsidiary of Goldman Sachs, and as Executive VP of Citadel Mortgage Co., one of the nation’s first FHA-approved multifamily co-insurers and  Fannie Mae DUS lenders. As a result of this experience, Mr. Kirton has extensive knowledge of multifamily lending, financial operations, development and management. Mr. Kirton earned a BA in Economics from Washington University in St. Louis.

Jay Rippeto CEO of Juniper Investment Group & CEO of First Choice Management Group   Jay Rippeto is the CEO of Juniper Investment Group, Ltd. and First Choice Management Group. Mr. Rippeto formed Juniper in April 2000. Previously, Mr. Rippeto was a Vice President in the real estate asset management and underwriting group for Fortress Investment Group, a New York-based real estate investment firm. Fortress was formed by the former principals of the Global Principal Finance Group of Union Bank of Switzerland (“UBS”). Mr. Rippeto joined UBS in 1997 and then Fortress in 1998. While with UBS and Fortress, Mr. Rippeto managed commercial assets ranging from direct property investments to performing and distressed mortgages, real estate owned through foreclosure, and commercial mortgage?backed securities. Prior to joining UBS and subsequently Fortress, Mr. Rippeto was a Vice President at Cheslock, Bakker & Associates, a Stamford, Connecticut, based real estate merchant bank specializing in both commercial mortgage?backed securities and direct equity investments. Mr. Rippeto has also worked for the Chase Manhattan Bank as an Associate in their Commercial Real Estate Department, specializing in distressed loan workouts, and for JMB Properties Company in its office building property management division. Mr. Rippeto earned a BA from Vanderbilt University and an MBA from Cornell University’s Johnson Graduate School of Management.

Bill Choice President of First Choice Management Group   Bill Choice is the President of First Choice Management Group and supervises all management company operations from the Houston office. Mr. Choice is involved in all aspects of property management from due diligence and property takeover to renovations and dispositions. Mr. Choice began his career with Arthur Young’s consulting practice in 1985, where he specialized in building computer systems for the oil and gas industry. For the next decade, he worked in systems consulting for Arthur Young, Ernst & Young, and BSG Consulting managing multimillion?dollar projects for clients including Exxon, Enron, Texaco, and Gas Company of New Mexico. Mr. Choice led multiple consulting projects concurrently while developing new business and mentoring new employees. His experience working in many client environments helped him transition from systems consulting to property management. Mr. Choice joined First Choice in January of 1996 and contributed across a broad scope of functions, including accounting, payroll, property management and construction before his assignment as a Regional Manager. Mr. Choice served as a Senior Regional Manager and Vice President of Operations until his promotion to President in 2011. He holds a Certified Property Manager® (CPM®) designation and a Texas real estate sales license.

For more information, please contact:

Ed Nwokedi

Email: ed@redswan.io

Phone: +1(713)-360-7928