Los Angeles, California | June 27, 2019
Apartment Income Investors (Aii) is pleased to announce the sale of Monte Carlo Apartments, a 592-unit apartment complex in Houston, Texas.
Aii acquired Monte Carlo Apartments in June 2015 in an off-market transaction sourced through an existing broker relationship. The property was purchased below market based on the seller's need to liquidate due to an upcoming fund life expiration.
Monte Carlo offered sound submarket fundamentals and strong in-place cash flow. Aii saw the opportunity to improve operations by reducing costs and increasing rental rates. Our plan envisioned upgrades to the rear clubhouse amenities, including the gym. We also saw the potential to lease a portion of the property to a day-care facility as well as to an after-school program open to residents and neighbors.
In addition, Aii reduced expenses by upgrading electric wiring and heating systems throughout the property. We replaced exterior lights with LED light, resulting in a 36% reduction in common area electricity costs. We also replaced four boilers with high-efficiency tankless boilers, reducing energy consumption by 32%. By installing high-grade, double-paned vinyl windows throughout the property, we further reduced energy costs and increased overall curb appeal.
As a result of Aii's business plan, net operating income increased by 53.65%, with a net return to investors of 14.59%. Michael Chesser, Founder and President of Aii, said, "Monte Carlo is an example of how the Aii team works to improve the physical plant, aesthetic appeal and overall operational efficiency of a property. The team controlled operational expenses, which was the main driver to increase the property value. From the point of view of tenants, Monte Carlo Apartments became a place to call home."
Aii sold the property at a premium price after a thorough marketing effort by a leading local apartment broker. For more information, also see this case study showing how the Monte Carlo investment exemplifies Aii's investment process.
About Apartment Income Investors
Founded in 1994, Apartment Income Investors (Aii) has a proven track record of buying underperforming Class B multifamily and commercial properties and implementing renovation and repositioning strategies to improve operations and substantially increase the value of each property. This strategy has proven successful through several real estate cycles with above-average returns to investors. The company's goal is to transform homes, lives and communities while delivering superior investment returns.