Leon Capital Adds 246 Units to Expanding Portfolio

SAN ANTONIO-Leon Capital Group has struck again, closing on its second area transaction in less than six months.  With the papers signed, the Dallas buyer now has possession of the 246-unit Vantage at Prue Road and is looking for more investments to add to its current total of 1,100.

Will Tolliver, Leon Capital’s director of acquisitions tells GlobeSt.com that Vantage at Pru Road at 6674 Prue Rd. in the northwest submarket  made sense for the company, given the asset itself and its location.  “San Antonio is centrally located, has a diversified employment base and is strong in military, education and medical,” he says. In other words, the demand drivers are in place to make San Antonio an ideal investment destination.

Vantage at Prue Road (which will be rebranded Hillstone on Prue Road) is Leon Capital’s second city buy. The company closed on the 292-unit Hillstone Creek at 7940 Pipers Creek St., also in northwest San Antonio, in June.  “We’ve been happy with the two deals we’ve gotten,” Tolliver says. A sales price was not disclosed, though the Bexar County Appraisal District values the asset at $13.6 million. Colby Mueck and Travis Anderson of Holliday Fenglio Fowler LP helped secure financing for the transaction.

Though the asset was built in 2008 and boasts a 95% occupancy, Tolliver notes the value-add component lies in rental increases. The previous owner/developer, the non-profit American Opportunity for Housing & American Agape Foundation Inc., specializes in affordable housing. This meant a percentage of units at Vantage at Prue Road were leased to lower-income tenants.

Leon Capital’s plan is allow some of those affordable leases to expire, then offer units at market rates. Additionally, Leon Capital will invest capital toward making minor interior improvements and expanding the fitness center.  Greystar Management Services, which is managing Hillstone Creek, will manage this latest acquisition.

With the dust settled on the Prue Road buy, Tolliver says it’s time for Leon Capital to acquire more. He says the hope is to buy an additional 300 to 500 units by the end of the year. Plans to beef up Leon Capital’s portfolio will continue in 2012, with the goal of acquiring another 1,000 to 1,500. He says multifamily investments make the most sense, especially in Texas, which is what Leon Capital is targeting. The Texas economy is fairly stable, supply is more constrained and demand is growing.

But Tolliver acknowledges that other investors are seeing the same great things in Texas multifamily assets as he and his partners are. “You can see a deal and get excited, but there’s always someone out there who can get a little more excited than you,” he says, philosophically. Because Leon Capital’s buys are done with the help of private equity, “we don’t have a timing ultimatum for placement of equity,” Tolliver says. “We can sit back and be patient and find great deals, like we did with Prue.”