SB Properties, Prolific California Investor, Enters Texas Market

SB Properties is splashing down in Space City, with the Shy family’s first portfolio purchase outside of California.

Prolific Los Angeles real estate investor Barry Shy, along with his sons Eric and Rommy, offloaded long-held multifamily properties in Los Angeles and acquired six apartment complexes in Houston. The properties comprise almost 1,900 units and are valued for tax purposes at $372 million, according to the Harris County Appraisal District.

Eviction moratoriums, which were lifted in April, put a burden on landlords and cast a shadow on the Los Angeles real estate market, Rommy Shy said.

“We were not happy with California,” he said. “Both politically and economically, I’m not aligned with what’s happening in the state. It’s a great place to live. I love California, and I don’t know if I’d ever leave, but from an investment perspective? I think California has gone downhill.”

SB Properties sold five L.A. apartment complexes for $405 million to investor Laguna Point Properties last year. The Texas properties were purchased via 1031 exchange, which allows sellers to sidestep capital gains taxes by reinvesting their proceeds into properties of equal or greater value.

The Houston portfolio consists of high-end complexes primarily located within the Inner Loop:

District 28, at 2828 Old Spanish Trail,
Stonegrove Fall Creek, at 8802 North Sam Houston Parkway,
Vargos on The Lake, at 2411 Fondren Road,
HiLine Heights, at 145 Heights Boulevard,
District at Washington, at 230 T C Jester Boulevard, and
Oasis at Piney Point, at 9100 Westheimer Road.

They were acquired from multiple owners. California-based MIG Real Estate was the seller of HiLine Heights, and Illinois-based Marquette Management was the seller of Oasis at Piney Point. The others haven’t yet been identified.

The Shy family set its sights on more “business friendly” locations throughout the Sun Belt before choosing to invest in Houston, given the high migration to the city and strong, cost-effective multifamily market.

“We looked at various markets, including Florida, but we were driven to Texas. I started looking at markets — Houston, Dallas, San Antonio and Austin — and I really found the best value in terms of rents and how rent growth is progressing in Houston,” Rommy Shy said.

“Texas, in general, is experiencing enormous growth, which is promising. Of course, the lack of state income taxes was a plus.”