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HOUSTON-The Austin, TX owner of the 574-unit Westcreek at River Oaks Apartments obtained a $27.5 million loan to retire existing debt on the property. Houston-Westcreek Partners LP received a floating-rate, seven-year loan with a 30-year amortization and a 75% LTV.

Loan originator Matt Greer of Capmark Finance Inc. tells GlobeSt.com that debt for the complex at 2049 Westcreek St. was obtained through Freddie Mac’s Capped ARM program which offers more prepayment flexibility. Though a prepayment penalty is still assessed, there’s “no defeasance as there would have been in a conduit loan,” says Greer, vice president of Capmark’s Austin office.

A flexible prepayment also means when market conditions warrant, the owner can redevelop the asset, which sits on 14.5 acres. “This is a well-maintained, but older property that sits on dirt, and the dirt is actually worth more than the apartments,” Greer explains. He says the asset’s owning partnership, which consists of local management company Kaplan Management Co. Inc. and an equity partner, will redevelop the property when market conditions come back.

Kaplan Management had owned the complex for a decade before the other partner bought into it about 2.5 years ago. “Redevelopment of the site was always in the plans, and those plans are market-driven,” Greer comments.

Westcreek at River Oaks is 96% occupied and has a mix of one-, two- and three-bedroom apartments. The units range from 714 square feet to 2,042 square feet, with monthly rents between $789 and $1,639.

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