Location in Fast-Growing Rental Market Adds Value
Patten East represents a value-add opportunity in one of the fastest growing rental markets in Austin, according to Mesa West Capital, which provided Wildhorn Capital with $33.5 million in short-term first mortgage debt.
AUSTIN, TX—A 284-unit multifamily community, Patten East, was recently acquired by Austin, TX-based real estate investment firm, Wildhorn Capital. While the property was well maintained by the seller, Greensboro, NC-based Hawthorne Residential Partners, Patten East represents a value-add opportunity in one of the fastest growing rental markets in Austin, according to Brian Hirsh, vice president, who led the origination team out of Mesa West Capital’s Chicago office.
Mesa West Capital provided Wildhorn Capital with $33.5 million in short-term first mortgage debt for the acquisition. The five-year floating rate loan is secured by Patten East.
“The story is similar to other major markets around the United States experiencing strong population and job growth, in which renters are being priced out of some of the core urban locations and seeking more affordable submarkets,” said Hirsh. “However, unlike many other major metros, East Riverside is an affordable submarket in very close proximity to the CBD, creating robust demand for well-maintained, well-operated rental communities.”
The low-density garden-style community is located at 2239 Cromwell Circle in the southeast Austin submarket of East Riverside, three miles from the city’s central business district. The property also is less than one mile from Oracle’s new 550,000-square-foot Waterfront Campus. The first major office development on the Southeast Waterfront, Oracle’s new campus is credited with transforming the Riverside submarket as a new business hub.
Other nearby employers include Google, Facebook, Cirrus Logic and Silicon Laboratories. Approximately 178,000 people work within a five-mile radius of Patten East.
“The loan provided the opportunity to lend on quality affordable housing in a fast growing market, which is more important now than ever,” Hirsh tells GlobeSt.com. “The proximity to Austin’s large CBD employment base is a huge demand driver for this location specifically.”
Patten East features a mix of one- and two-bedroom apartment homes in 19 low-rise residential buildings on a 12-acre site. Community amenities include a clubhouse with resident lounge and Starbucks coffee bar, 24-hour fitness center, saltwater swimming pool, outdoor kitchen and fireplace, and dog park.
Wildhorn Capital’s current portfolio consists of 1,570 multifamily units located primarily in Austin and San Antonio. The firm plans to make improvements to building interiors, common areas and unit interiors upon rollover.
Financing was arranged by Newmark Knight Frank’s Austin office.
Direct international capital sources invested $12.1 billion last year in multifamily assets, according to a report by Newmark Knight Frank. Canada led all countries in acquisitions in 2019, accounting for 52.2% of all international capital investment. Non-major markets accounted for 74.9% of international capital volume, a substantial increase from 53.2% in 2018, says the report.