AUSTIN-Stepping up its Texas plan, Colorado & Santa Fe Real Estate has bought 572 class A units in Northwest Austin and placed a contract for 330 class B apartments in Fort Worth. To further seed the acquisition push, the Broomfield, CO-based buyer has hired a vice president to open an office in the capital city.
Shelly Rosales, with nearly 25 years' experience in the multifamily industry, says the investment group has Austin and Dallas/Fort Worth in its sights due to predictions for jobs, occupancies and rent. "We are shying away from San Antonio," she tells GlobeSt.com, adding Houston isn't ruled out although it's not high on the list because it's not demonstrated the same growth dynamics.
The basic buying parameters are complexes from 100 to 600 units; prices ranging from $10 million to $50 million. Rosales says the corporate office hasn't designated an allocation for the number of units to acquire or the amount that will be spent this year. "We could do as much as $200 million in deals if they fit our underwriting parameters," she says, "if it fits into our box for rent growth, job growth and vacancy. We are very deal specific."
The Fort Worth contract is an off-market deal whereas the purchase of Sonterra I and II at 8801 Ranch Rd. and 10320 Boulder Lane, respectively, in Austin's northwest submarket was marketed by CB Richard Ellis broker Charles Ciare of Austin for San Diego-based Fairfield Residential LLC, which was seeking $48.8 million for the pair. "We are working all angles," says Rosales, who teamed with Peter Wells, the firm's new partner, to close the deal.
The Sonterra developments, built in 1998 and 2000, are 92% leased, a mix of one-, two- and three-bedroom apartments averaging 934 sf. The average rent is $775 per month.
"The upside will be in reducing concessions and stabilizing occupancy," Rosales says. She estimates the average concession has rent resting about 15% below the market rate.
Rosales says Colorado & Santa Fe has spent about $75 million in Austin in the past year. In April 2005, it acquired the 304-unit Sorrento at 6201 Sneed Cove and 260-unit Club at Summer Valley at 744 William Cannon Dr. In 2001, the investment group picked up the 180-unit Stillhouse Canyon in the Northwest Hills and subsequently undertook a condo conversion. Rosales says the plan is keep the Sonterra as a rental property. And like the others in the region, Dallas-based Greystar Management Co. has a local team to oversee the asset.
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