Fort Worth has a new fast-growing multifamily investment company: Bellrock Real Estate Partners, formed last year by former Olympus Real Estate executives Anthony Wonderly and Jarrad Principe.
Since Sept. 3, Bellrock has closed on three large multifamily properties and rebranded them: Bellrock Upper North in Haltom City, Bellrock Bishop Arts in Dallas, and Bellrock Market Station in Katy. The company has a fourth property under contract, a $90 million property in Houston. Once they close on that purchase, Bellrock will own more than 1,200 units.
Wonderly and Principe started Bellrock up early in 2020, but the market slowed immediately when COVID-19 hit. They put the infrastructure in place to allow them to begin tracking opportunities. And by July, the two began making offers.
“I would probably say, in my opinion, that the only regret is that we didn’t buy every single piece of property that we looked at,” Wonderly said in an interview.
For Wonderly and Principe, the startup “allows us to get back to really enjoying the business again,” Wonderly says.
For the first three deals, the two raised more than $40 million in equity. They raised about $27 million for the one under contract, they say.
Anthony Wonderly
Bellrock typically is financing the purchases on 70% debt, with 30% equity paid in. “We’re investing a significant amount of cash alongside of our other equity partners,” Principe says of the investment he and Wonderly are making.
Once they close on the Houston property that’s under contract, they estimated Bellrock will have about $250 million in assets under management.
Wonderly and Principe named their company after a lighthouse in Scotland. “It’s one of the oldest standing ocean lighthouses in the world,” Wonderly says. “We loved the theme of a lighthouse because a lighthouse is a guiding light.”
Wonderly’s career has been on the operations side, and Principe’s on the financial side. “Our strengths and weaknesses complement each other,” Principe says.
Bellrock will have almost 30 employees when it closes on this next multifamily property, Wonderly and Principe say.
Investor demand for quality multifamily is strong today, Wonderly and Principe say.
“It’s extremely hot right now,” Principe says. “The demand we’ve seen in Dallas-Fort Worth is just at an all-time high, which is why we started looking down in Houston” earlier this year. “We’re proud we’re continuing to find good opportunities because there’s a lot of competition out there.”
Jarrad Principe
“It’s one of the safest asset classes in real estate,” Wonderly says. “And more and more equity and institutional capital continue to be infused into multifamily, and especially DFW and Texas in general. We’re extremely bullish on multifamily for years to come in DFW.”
He adds, “All the opportunities we passed on last year because we thought they were a little bit overpriced now look like they would have been steals last year.”
Cap rates — the estimated rate of return on investment — continue to move down on multifamily properties. “In December, if we saw something at a 5[%], we were ecstatic,” Principe says. “And nowadays, almost every Class A deal is trading below a 4[%] cap, some in the low threes” in DFW.
“And it continues,” Wonderly says. “We made an offer on an asset; we felt we made a very aggressive offer. And it’s highly competitive. And that cap rate keeps getting closer and closer to a three. Not above a three. A three.”
Continued corporate relocations to Texas “show what a great investment our state is,” Wonderly says. “Historically, [multifamily] has been very resilient. Even during the housing crisis years ago, multifamily was very resilient and came out of it extremely well.”
As Bellrock continues to look for new deals, it’s tied up properties under contract before it’s sought to raise equity, Wonderly and Principe say.
“Investors love that,” Wonderly says. “The projects we’ve already closed on, we put up all the earnest money. We put up the hard money. We put all the money for the due diligence. We had the project 100% under contract and already in due diligence before we even went out to investors.”