Values and Building Costs Continue to Increase
What makes The Triangle unique is the type of deal creativity necessary in Austin, i.e., the use of a condo map to legally divide the retail from the multifamily, making each piece more valuable.
AUSTIN, TX—The Triangle, a mixed-use multifamily and retail complex, features 529 units. In addition, there are more than 35 on-site retailers, a city park, three pools with hot tubs, a 24-hour fitness zone, theater room and resident lounge located at 4600 West Guadalupe St.
A $78 million seven-year floating-rate refinance loan with a three-year interest-only feature was recently facilitated for the property by CBRE’s Brian Eisendrath, Brandon Smith and Annie Rice. The team represented the owner, Houston-based residential investor and developer, The Dinerstein Companies, which purchased the property in 2017. There were complicated negotiations with the state and the lender throughout the transaction, according to CBRE.
“Since Dinerstein closed the acquisition last year, they have legally separated the retail and residential portions of the property, creating tremendous value,” said Eisendrath. “However, the separation of parcels and the three phases that are on ground leases held by the state of Texas added layers of complexity to this refinance. Our relationship with the lender allowed us to hold pricing and sizing for over three months, giving Dinerstein the time to successfully navigate the complicated ownership structure.”
The Triangle benefits from its location in a high-growth market. Austin has recorded continued apartment demand, with its 12th consecutive quarter of positive net absorption, according to CBRE research. Central Austin is a high barrier-to-entry submarket due to lack of developable land, resulting in annual average rent growth of 6.3% since 2010.
“Austin is continuing to see strong apartment demand from investors. This has led to less available developable land and when land is available, a more expensive overall process,” Smith tells GlobeSt.com. “By splitting the retail and multifamily portions of The Triangle, each piece can be valued separately leading to more diversified investment opportunities for the company.”
This kind of deal creativity is increasingly necessary in markets such as Austin, where real estate values and building costs continue to increase, Smith observes.