Hawthorne at the DistrictHawthorne at the District is a 284-unit 80s-vintage multifamilycommunity near the Oracle campus.

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AUSTIN, TX—Hawthorne at the District is a 284-unit 80s-vintagemultifamily community that recently sold to Wildhorn Capital, anAustin-based multifamily investment firm focused on value-addassets in Texas markets. The price was undisclosed.

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The property was 97.5% occupied at the time of sale. It islocated near the East Riverside corridor, a district that israpidly transforming into a true live-work-play destination,anchored by the expanding Oracle Cloud campus.

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Newmark Knight Frank vice chairman Patton Jones represented thesellers, Hawthorne Residential Partners, a North Carolina-basedmultifamily investment management group, and Midway, a NewYork-based multifamily investment firm active in the Southeast andTexas value-add markets. Additionally, Patrick Short, managingdirector for NKF's debt and structured finance group, facilitatedthe financing of the transaction for Wildhorn Capital.

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"NKF cleared the market for debt options that would complementtheir plan, ultimately selecting Mesa West Capital. Lenders remainfocused and eager to deploy capital in the Austin market," saidShort.

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This is Wildhorn Capital's seventh transaction and financingwith NKF, and its third acquisition in the Austin market, bringingits total Texas multifamily portfolio to 1,854 units.

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"The East Riverside corridor has been experiencing majorinvestment and redevelopment," Jones tells GlobeSt.com. "Due to itsproximity to Austin's CBD, the area is home to many youngprofessionals that work downtown but opt for the lower rentsoffered in East Riverside, which is now bustling with new retail,entertainment and employment opportunities. New investors from Eastand West Coasts markets entering the Austin market see an urbanrevival happening in East Austin and are jumping at the opportunityto own in this rapidly improving submarket."

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The Wildhorn Capital principals, Andrew Campbell and ReedGoossens, plan to continue their value-add model with theacquisition of Hawthorne at the District. Wildhorn Capital'sprocess includes implementing all value-creating strategies withinthe first 12 months of ownership and completing all rehabilitationwork within the first 18 months, aiming to garner the highestreturns for investors.

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"The buyer plans to upgrade the asset to capture some of therent delta between Hawthorne at the District and nearby newlyconstructed luxury communities," Jones tells GlobeSt.com. "Theproperty interiors were previously renovated with different finishlevels, and the new owner has the opportunity to upgrade roughly50% of the units and create a uniform finish out. This couldinclude upgrading kitchen cabinets and backsplashes, framedbathroom mirrors, and hard surface floors."

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Completed in 1987, Hawthorne at the District will be across thestreet from the planned 4700 East Riverside project, a 97-acremixed-use development with plans to include 4 million square feetof office space, as well as parkland, hospitality and medicalspace.

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Oracle's 560,000-square-foot campus is less than one mile fromHawthorne at the District. The company has already startedconstruction on its 420,000-square-foot phase II expansion,creating space for up to 10,000 employees at full build out.

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"Hawthorne at the District represents a growing trend ofvalue-add trades in the East Riverside corridor as this arearapidly develops, spurred by the presence of Oracle's expandingcampus," according to Jones. "Investors are looking to capitalizeon residents seeking affordable, quality living options justoutside of downtown Austin. The proximity to Oracle, downtownAustin and east Austin positions Hawthorne at the District toattract a talented, high-earning resident base for years tocome."

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Fourth-quarter 2019 US multifamily volume totaled $50.5 billion,up 4.3% quarter-over-quarter, according to a NKF report. Non-majormarkets accounted for 72.1% of investment in 2019, as investorsgravitated toward markets with a strong combination of yield andgrowth prospects.

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High levels of new supply were met with robust demand in 2019,as absorption outpaced units delivered. Although Dallas added thelargest number of units last year, Charlotte had the largestinventory increase on a percentage basis at 3.3%, compared with1.1% nationally.

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Lisa Brown

Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.