The Northwood Apartments in the New Braunfels submarket of San Antonio, Texas, has had only one owner since its original construction in 1998.
Last week, that changed. Platte Canyon Capital purchased the asset from its original developer, a private seller, in an opportunity with fairly limited competition, Platte Canyon Co-Founder and CEO Brennen Degner told Multifamily Dive.
Northwood Apartments, constructed in 1998 and in 2017, provides value-add upside through both physical improvements and operational enhancements, according to a Platte Canyon press release shared with Multifamily Dive. The property was 70% leased at closing, which Degner attributes to market supply and aggressive rent increases across the property. The firm will bring in an institutional-quality property management firm.
“The opportunity that we saw was to step in and have a management team that's a little bit more in tune with where rents are and where concessions are,” Degner said.
Platte Canyon also plans to renovate interior units and upgrade the pool, fitness center, clubhouse, parking areas and building exteriors.
New Braunfels sits between Austin and San Antonio within Texas’ Innovation Corridor, which is attracting employers in technology, bioscience, logistics and advanced manufacturing, per the release.
“New Braunfels has a clustering of hospitals,” Degner said. “So there's a very large medical employment base there. So it just has really positive demographics.”
For Platte Canyon Capital, Northwood Apartments represents the second investment through its programmatic partnership with a Los Angeles–based investment manager to target up to $100 million of equity in special-situation multifamily opportunities.
Last year, Platte Canyon purchased the 268-unit Allure Apartments in San Antonio, where it sees less competition for properties than in other metros.
“San Antonio has been rough to operate in, and so it's been one of the markets where we see the most distressed opportunities,” Degner said. “At the same time, it's been a market that, for the most part, institutional or heavy-hitter equity has rotated out of. And so we're seeing this moment in time where there's a lack of supply on the capital demand side.”
However, Degner is optimistic that the market will rebound. While Texas has been hit with a lot of supply over the past half-decade, Degner said that higher municipal impact fees have significantly raised the cost of new apartment construction and curtailed the future supply pipeline.
“In the way we're underwriting things, we don't really need things to pop,” Degner said. “We just need it to get back to a normal functioning market. With the absorption we've seen and then the supply dwindling down, we think that's not too far off.”
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