Drever Again Taps Austin, Spends $32.3M

The Tiburon, CA-based Drever Opportunity Fund LP bought the complex from Limestone Ranch LP, an investment partnership based in Birmingham, AL. The price was about $63,000 per unit, according to Diana Zuniga, president of Austin-based Investors Alliance Inc.

Zuniga represented the seller and Sean Sorrell, senior vice president in CB Richard Ellis' investment group in Austin, acted on behalf of Drever.

The purchase comes in a market of fewer sales of apartment complexes at lower prices. There were nine sales through the first nine months of this year compared to 19 sales in all of 2001. The average price per unit for class A apartments was $72,713 through September, off nearly $10,000 from the per unit average of $82,100 in 2001.

The overall price per unit peaked in 2001 at $56,997, according to Austin Investors Interests, which tracks the multifamily market. It's fallen off to $52,192 this year, even lower than 2000's $55,586.

The high-tech bust struck the Austin apartment market hard, driving occupancy rates down to about 89% this year. Some recovery is anticipated next year when occupancies could rise to 91%.

The Limestone Ranch buyer expects some short-term pain, but is looking for long-term gain--and more apartment deals--in Austin. The firm also owns the Hamilton, a 102-unit complex at 2200 Panther Trail in the south submarket.

Paul Odland is president and CEO of Concierge Asset Management, which sponsors the Drever Fund. "We're trying to build a presence in Austin because we think it's a great long-term place to be," Odland tells GlobeSt.com. He says Austin, which he described as an entrepreneurial city, will create plenty of plenty of jobs as the economy improves.

Odland says the area around Limestone Ranch is prime for upscale apartments, but has a lot of competition. It's close to La Frontera, a 328-acre mixed-use development at I-35 and FM 1325, as well as employers such as Dell Computer Corp., Samsung Austin Semiconductor and IBM Corp.

Limestone Ranch, built in 1996, is 92% occupied. Odland says the new owners won't make big, noticeable changes, but will make a number of improvements that will improve the complex's competitiveness. "There's a lot of new competition up there, so if your product isn't shiny and new, it's hard to compete," he says. "Especially in a down market.