Major Acquisition: Austin Investors Purchase Two Apartment Complexes in San Antonio

Austin Investors Acquire Two Major Apartment Complexes in San Antonio

Even in a market mired in depressed conditions, with sagging rent rates and low occupancy figures, Austin-based investors have made a bold move by acquiring two major apartment complexes in San Antonio. This highlights an ongoing interest among investors in the San Antonio multifamily real estate sector.

Austin Firms Purchase Prominent Properties

According to Bexar County property records, the Austin investment group, WayMaker Ventures, purchased the iconic Jones & Rio apartment complex located along the vibrant River Walk, which sits across from the San Antonio Museum of Art. This transaction took place on April 19, 2024.

Subsequent to this, on April 25, 2024, Palladius Capital Management, also based in Austin, acquired the Luxx apartment complex through associated shell companies. The Luxx is a significant 260-unit complex ideally located at 6023 UTSA Blvd., positioned adjacent to the Leon Creek Greenway and serving a large population of UTSA students. The purchase prices for both these properties remain undisclosed.

Financing Arrangements

The shell companies linked to Palladius Capital Management procured a $32.5 million loan from Metlife Real Estate Lending for the acquisition of Luxx, a property that has been valued at $43.4 million by The Bexar Appraisal District this year. Similarly, WayMaker Ventures obtained a $13 million loan from Horizon Bank for the 191-unit Jones & Rio apartment complex, which has been valued at $44.4 million.

Before this move, the Luxx was owned by Preiss Company, a student housing investment company hailing from Raleigh, North Carolina, since 2013. Prior to the recent acquisition, Jones & Rio was owned by two powerhouse firms, New York City-based Benefit Street Partners and New Jersey-based Strategic Properties of North America.

Conditions of the San Antonio Property Market

Despite the seeming success of these acquisitions, the local apartment complex sector has witnessed its share of challenges. Following record highs in 2021 and 2022, sales of apartment complexes have seen a significant decline in 2023, largely attributed to financial constraints, as per the latest report from Austin Investor Interests, an analytics firm specializing in the local market.

The first quarter of 2024 saw a further slump, with only nine apartment complexes changing hands. However, the report suggests an expected increase in sales for the year due to potential investors seeking to offload their properties in anticipation of higher loan rates.

Turning Point for Central Texas Market?

Despite the challenging scenario, the market shows some signs of improvement. The report noted smaller declines compared to previous quarters, indicating a potential turning point. Meanwhile, north downtown San Antonio continues to thrive with newer developments, such as the opening of major complexes and office buildings, which promise further growth. This continued investment into the area’s infrastructure mirrors a strong belief in the enduring appeal and potential of downtown San Antonio.