Tiburon

LSCRE secured Tiburon at a 23.5% discount to recent sales comps through its track record and relationships in Houston. The seller is a California-based investor focused on office properties, and Tiburon was the only Houston multifamily asset in his portfolio. Third-party management left operating upside that LSCRE is positioned to capture, with over 2,300 units within 10 miles and three communities on the same road.

Location:

Less than 2 mi from Apple’s new Houston manufacturing center, operated with Foxconn
The plant already ships AI servers, and Mac mini production starts later this year
Foxconn has committed another $71.9M to expand the site
Power Electronics plans a 53-acre manufacturing campus ~2 mi away and expects to create 400+ jobs
Access to I-290 and Beltway 8 puts 300,000+ jobs within 20 minutes of the property
Schools: zoned to Cy-Fair ISD, the #2 school district in Harris County and #1 for athletics
Limited new supply: 28 units under construction within 5 mi (0.1% of inventory)
Houston added just under 127,000 residents in the 12 months ending July 1, 2025, the most of any U.S. city (U.S. Census)
North Houston posted the strongest annual rent growth in the metro, at 5.4%
Household income of $88,791 within 1 mi. Renting at Tiburon costs $1,350 per month, vs. $2,640 to own a median-priced $306,000 home (assumes 20% down and a 6.5% mortgage)

Property:

Purchase Price: $38,000,000 ($118,750/unit) / Going-In Cap Rate: 5.02% / Y1 Cap Rate: 5.62%
Five comparable sales from the 9 months before acquisition averaged $155,138/unit. LSCRE’s basis is $36K/unit lower
Total Capitalization: $44,400,000 ($138,750/unit), including $4,295,000 ($13,422/unit) of CapEx and reserves
92.5% occupancy at underwriting / 70.1% breakeven occupancy
In-place rent of $1,330 ($1.45/SF) vs. a $1,539 ($1.52/SF) average across four nearby rent comps
Average unit size: 910 SF
All units are in classic condition: Formica counters, cherry cabinets, faux-wood plank flooring, and full-size washer/dryer sets
Amenities: resort-style pool, resident clubhouse, fitness center, outdoor grills, courtyard, and attached and detached garages

Business Plan Highlights:

55%+ projected NOI increase from expense savings and value-add initiatives
Same road as three LSCRE communities: Preserve at Copperleaf, Preserve at Copper Springs and Discovery at West Road

◦ 896 units with 94% average occupancy

◦ All three run under their underwritten operating expenses: Copperleaf by $652,581 over the trailing 12 months, Copper Springs by 18.7% in its first full quarter, and Discovery by 7.1% over eight months of ownership

◦ Copperleaf has averaged 97.9% occupancy over the trailing 12 months

Controllable expenses cut by 21%+

◦ Vertically integrated operations: in-house make-ready and construction work, in-house valet trash, and leaner administrative costs

◦ Shared maintenance and make-ready crews and staff across 1,322 LSCRE units within 5 mi

Platinum renovation of 80 units ($13,500/unit) to achieve ~$175 effective rent premiums

◦ Quartz countertops, stainless steel appliances, undermount sinks, gooseneck faucets, vinyl plank flooring, and repainted cabinet fronts

◦ Countertops and appliances will be sourced through Home Depot’s contractor program, saving an estimated $2,500 per unit. These savings are not included in the projections

Full exterior repaint ($375,000), pool upgrades ($60,000), and a parcel locker ($45,000)
Bulk Wi-Fi and package locker programs to generate $30+/month in additional income per unit

Capital Stack:

Debt:

◦ $23,400,000 / 61.6% LTV / 56.7% LTC / 5.82% rate

◦ Matures May 1, 2030 / Interest-only through May 2027, then 30-year amortization / Standard Defeasance

Equity: $21,000,000

Return Metrics (Projected):

Class A ($100K min): Net AAR: 23.7% / EM: 1.71x / Avg CoC: 5.3%
Class B ($500K min): Net AAR: 27.1% / EM: 1.81x / Avg CoC: 5.3%
Class C ($1M min): Net AAR: 29.6% / EM: 1.89x / Avg CoC: 5.3%
3-year projected hold / Stabilized Yield on Cost (Untrended): 7.28%
Monthly distributions begin November 2026