Boulder Peak Capital (BPC) acquired Bowery Park and the Montana Apartments (FKA The District at Highland Village) in April 2021, a mixed-use property with 161 luxury apartment units and 75,565 square feet of retail and office space located in the affluent Dallas suburb of Highland Village, TX. The property was developed in phases between 2010 and 2018.
At the time of purchase, the property had a considerable amount of commercial and residential vacancy. The business plan consisted of rebranding the community to emphasize the luxury apartments while also improving visibility and traffic for the commercial tenants. During the hold period, the partnership increased commercial occupancy from 62% to 93% and increased the apartment occupancy from 79% to 99% while increasing the rental rates by 33%.
Upon takeover, BPC implemented professional property management for the residential component and engaged market leading landlord representation for the commercial leasing component. BPC also performed a complete market repositioning by creating two separate “brands” for the different asset classes. Bowery Park to identify the retail and office sectors and the Montana Apartments at Bowery Park to establish the luxury apartment’s identity. Bifurcating the two components not only clarified what the property offered, but it created significant local buzz helping to re-establish the location within the community. As part of the rebranding, BPC performed a full exterior upgrade to visually attract apartment renters while also helping to highlight the ground floor retail tenants. These drastic and immediate changes allowed BPC to increase commercial and residential occupancy within a short period of time by taking an asset with a marginal reputation to a destination hub within the community. In addition to increasing occupancy, BPC was able to increase the average apartment rent from $1,409/unit to $1,877/unit (33% increase).
In addition to improving financial performance, BPC restructured the asset’s governance to take advantage of market dynamics that created a price dislocation. The multifamily focused buyer pool is traditionally more aggressive than the retail and office buyer pool, therefore, BPC recognized the opportunity to implement a condominium regime which would allow for the property to be bifurcated into a residential and a commercial component. Given the complications and time constraints, the initial business plan provided for up to five years to stabilize performance and then create and fully implement the condominium regime. However, in less than 11 months after acquiring the property, BPC began to recognize a possible negative market shift as the federal reserve began increasing the fed funds rate. With the occupancy and income performance far exceeding the stabilized projections, BPC moved quickly to structure and implement the condominium regime while simultaneously marketing the property for sale.
This successful strategy allowed BPC to navigate the deteriorating debt markets and work with both buyers to ensure a smooth and timely sale.
Please reach out to IR@bpccre.com for more detail including the key return metrics.
