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AUSTIN-A year and a half after buying an eight-property portfolio, Legacy Partners Inc. has obtained $35.4 million from Freddie Mac to retire HUD loans for two complexes in an eight-property portfolio in Northwest Austin. The refinanced assets are the 300-unit ArrowWood Apartments and 154-unit Enclave Apartments.

Spencer Stuart Jr., senior vice president and Texas partner for Legacy Partners Residential Development Inc. in Foster City, CA, says five assets required HUD 221(d)(4) loan assumptions when the portfolio acquisition was completed in 2006. From the onset, the plan was to retire the HUD loans on the complexes, a 2,044-unit block surrounding 12300 Riata Trace Pkwy. Legacy has collateralized a $20.1-million loan with ArrowWood and a $15.3-million one with Enclave.

“By the end of February, we’ll be down to two,” Stuart tells GlobeSt.com. “We’re working on refinancing RockCreek Apartments, which will close in late February.”

Capmark Financial Group Inc. is Legacy’s equity partner for the portfolio. Michael Bryant, senior vice president with Capmark’s Dallas office, adds that the WoodTrail and GreyMoss complexes won’t be refinanced immediately because their rates are still locked out, but he does expect that the last two will be done during the next two years. Bryant and Robert Jennett with Capmark’s Denver office, arranged the refinancing of Enclave and ArrowWood through Freddie Mac.

The refinances for ArrowWood and Enclave represent a 73% loan-to-value ratio. The packages have seven-year terms with interest-only payments.

The Riata complexes were developed between 1996 and 2001. All complexes are being upgraded, with 25% of the units to be outfitted with new countertops, lighting packages, wood flooring and plumbing during the next year at a cost of $4,000 to $5,000 per unit. “The older apartments needed freshening up, and we also had planned, from the start, to remodel the health club and community center,” Stuart says.

Bryant says the JV has mapped out a three- to four-year rehab program. He says there are no plans on the immediate horizon to develop the extra 17 acres that went along with purchase, but the JV still has it targeted for another complex.

In the first 18 months of ownership, Stuart says “we’ve been able to raise rents significantly, commensurate with overall improvements in the Austin market.” The 96%-leased ArrowWood Apartments are renting for $1.02 per sf and the 94%-occupied Enclave has rents averaging $1.10 per sf. Units average 923 sf.

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