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Sunstone Two Tree pays $29M for apartments in Houston’s Westchase

California firm plans to spend $10.5 million on renovations

Sunstone Two Tree Acquires $29M West Houston Apartment
Sunstone Two Tree's John Maddux and at Villas Del Paseo in 3030 Elmside Drive (Sunstone Two Trees, Villas Del Paseo)

A California-based multifamily investor dropped $29 million on an apartment complex in the Westchase area of Houston.

Sunstone Two Tree bought the 384-unit Villas Del Paseo, at 3030 Elmside Drive, for $75,500 per unit, according to a news release. The seller was Austin-based Thrive FP.  

The complex was built in 1978 and remodeled in 2015, according to the Harris Central Appraisal District. The buyer plans to spend $10.5 million, or about $27,000 per unit, on interior and exterior renovations. The upgrades, including the addition of dog parks, are set to be completed next year.

Sunstone Two Tree, the result of a merger last year between Sunstone Properties Trust and Two Tree Capital, invests in, develops and manages rental communities in high-growth markets. Its acquisition of the Villas Del Paseo underscores a desire to expand its footprint in the Bayou City. 

It has 10 other holdings across the Houston metro, including multifamily projects in Rosenberg, Conroe, Baytown, Dickinson and Galveston. Sunstone Two Tree already has a firm footprint in the growing Westchase region. 

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In 2016, it acquired the 282-unit Commons at Westchase, at 10751 Meadowglen Lane. That Class B property was appraised last year for $30 million, according to HCAD. A 2018 remodel nearly doubled the property’s valuation. 

Multifamily properties have been springing up across Houston’s western and northwest markets as the region has seen a rush of residents. However, Westchase has been an outlier for the otherwise thriving West Houston market. It has one of Houston’s youngest enclaves, which would make it a hotbed for apartment construction, but the neighborhood’s multifamily pipeline is dry, with no new units in development. 

Westchase’s multifamily market boasts an 89 percent occupancy rate, in line with Greater Houston’s overall rate, and was one of the few areas in the city that saw a decrease in rent prices year-over-year, dipping 1.1 percent between the third quarters of 2022 and 2023, according to Transwestern. The neighborhood’s average effective rent is about $1,150.

Greater Houston’s multifamily market is projected to perform well this year, with signs of slightly increased vacancy, as record-setting deliveries are expected to cut into demand. 

The metro leads the nation in criticized multifamily loans, with nearly one in four properties donning the designation, amid oversupply and slowing absorption, according to a Trepp. 

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