Lionstone Purchases Luxury Apartments in Houston's River Oaks

High interest rates haven’t stopped Lionstone Investments from snapping up a luxury apartment building in Houston’s River Oaks neighborhood.

Local firm Lionstone Investments has acquired the James, an eight-story, 344-unit complex at 2303 Mid Lane, from a Dallas-based venture of StreetLights Residential and Stonelake Capital Partners, the Houston Chronicle reported.

Although the sale price was not disclosed, Lionstone believes the price paid is lower than it would cost to develop a similar apartment building due to factors including high construction and land costs .

“This investment gave us the opportunity to purchase a newer Class A apartment building at a substantial discount to replacement cost, at a time when there will be historically low supply delivered in this prime loop location interior,” Bailey Jones of Lionstone told the media outlet.

The James is 94% leased, with monthly rents ranging from $1,325 to $3,890. Amenities include a full-service private bar, pool, clubhouse and fitness center.

StreetLights and Stonelake developed the James for an estimated $100 million. The complex, opened in 2016, is part of a mixed-use development that includes an adjacent 17-story apartment building called Ivy. The developers, along with lender Texas Capital Bank, still own the Ivy.

The sale comes at a time when many multifamily investors are avoiding acquisitions amid high interest rates. Apartment sales in Houston totaled $210 million in the first quarter, down significantly from $320 million a year earlier, the newspaper reported, citing Transwestern.

Lionstone, however, remains optimistic about the future of Houston’s rental market. Given the current pace of demand, the company estimates that apartments under construction in River Oaks could be fully leased within two years.

Separately, Lionstone turned heads last month when it sold the two-building Jones on Main office complex, which includes the 34-story JPMorgan Chase building, in downtown Houston.

—Quinn Donoghue