Earlier today, Knightvest Capital announced the acquisition of three apartment properties totaling 1,027 units in Round Rock, Texas, within the Austin metropolitan area, according to a press release shared with Multifamily Dive.
The seller was not identified in the release, but the Austin Business Journal reported that Lynd Living bought Lakeside at La Frontera and The Enclave Frontera in March 2020. Lynd didn’t reply to request for comment.
The properties include:
- The 411-unit Enclave at La Frontera, which was built in 2004 and will be renamed Brixton
- The 366-unit Lakeside at La Frontera, which was built in 2001 and will be renamed Calder
- The 250-unit Legends Lake Creek, which was built in 2001 and will be renamed Sutton
In addition to implementing its management portfolio across the Silicon Hills portfolio, the Dallas-based multifamily investment manager plans to renovate the exterior with new paint, upgrade common-area amenities and update a subset of unit interiors with features such as new flooring and fixtures and quartz countertops.
“We want to take about 20% to 25% of the units to a like-new condition that will literally mimic new construction,” Knightvest Founder and CEO David Moore told Multifamily Dive. “It will be like new, and then touch all the common areas.”
Enclave and Lakeside sit adjacent to each other within the La Frontera master-planned mixed-use development in Round Rock, per the release. Legends Lake Creek is approximately 6 miles to the west in the Lakeline/Lake Creek submarket.
Located in Northwest Austin’s Silicon Hills corridor, the portfolio offers convenient access to major employment centers, including Dell’s world headquarters in Round Rock, which anchors the immediate area surrounding La Frontera, per the release. Apple’s second Austin campus, as well as Samsung, Amazon, Texas Children’s Hospital and other major technology, life sciences and healthcare employers are within minutes of the properties.
While there’s a robust employment market around the Silicon Hills corridor, the area's school system was also a major attraction for Moore. “Round Rock is where Dell is and there are a whole lot of jobs, but the real reason is you're in a school system that has A-rated schools,” he said.
Deep discount
Moore said the properties were last purchased at “peak pricing” in the early 2020s, and Knightvest bought the assets at a significant discount to their previous sale price.
“Austin is out of favor,” Moore said. “Everyone understands the supply story. Every developer started building and the basis really has been reset. I don't know if it's all the way to half, but it's, it’s a big discount to what it traded for previously.”
However, Moore said the Silicon Hills portfolio is in much better shape than some of the other deeply discounted apartment properties hitting the market in Texas.
“The difference here is these were 25-year-old properties in a good location, not the ‘70s and ‘80s properties in a bad location,” Moore told Multifamily Dive.
The closing of the multifamily properties represents the 20th investment in Knightvest’s Fund II. Since its founding in 2007, the firm has invested over $12 billion to acquire over 65,000 units across high-growth metro areas in Georgia, Texas, Arizona, the Carolinas and Florida, per the firm’s website.
Knightvest was No. 30 on the latest National Multifamily Housing Council Top 50 with 33,603 units, and Moore plans to continue adding to that portfolio. He said the firm is actively seeking more deals and currently has a foreclosure in North Dallas under contract for $20 million less than the prior loan basis.
“We want to buy 2000s-ish deals, but at a big discount,” Moore said. “So the next one [in Dallas] is almost 20% under the prior loan basis. They already foreclosed on the equity, and then the lender is taking a haircut.”
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