Mesa West Capital Lends $34M on Austin Apartment Complex Acquisition

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Mesa West Capital has provided $33.5 million to Wildhorn Capital for the firm to acquire a rental community in Austin, Texas, according to information released today by Mesa West. 

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The five-year, floating-rate first mortgage loan will help facilitate local Austin-based investor Wildhorn’s purchase of a 284-unit rental complex called Patten East from Hawthorne Residential Partners, a Greensboro, N.C.-based multifamily owner and operator, according to Mesa West. The purchase price could not be gleaned.

The deal was originated by a Mesa West team led by vice president Brian Hirsh out of the lender’s Chicago office. Newmark Knight Frank’s Austin office arranged the financing on behalf of Wildhorn. The transaction closed March 12, “right on the cusp of entering this level of uncertainty [due to the novel coronavirus outbreak],” Hirsh told Commercial Observer.

“It was a loan we were happy to make amid some growing uncertainty,” Hirsh said. “Our thesis made sense prior to the coronavirus volatility and it makes sense in today’s current environment. Economic contraction increases the need for quality, more affordable housing near urban centers. Even in a time of unprecedented market conditions, people need a place to live, and this kind of quality, affordable real estate will remain in demand through up and down markets.”

 He added: “Opportunity selection is more important than ever [right now], and as a firm, we’ve tended to err on the side of caution, using conservative metrics, and that’s positioned our portfolio well in the current economic environment.” 

The asset is located at 2239 Cromwell Circle West in the Austin submarket of East Riverside, just a few miles southeast of Downtown Austin and within walking distance to Oracle’s new corporate office campus on the Colorado river waterfront. Nearby Oracle are other offices serving companies like Google, Facebook, Cirrus Logic and Silicon Labs.

“Oracle was the early dominant force in this pocket of the market and a major contributor to the growth of [East Riverside],” Hirsh said. “[The area has benefitted from] quality 1980s and 1990s vintage apartment communities, and the access to downtown is unparalleled for housing at this cost.”

Wildhorn’s focus is on acquiring and repositioning value-add multifamily properties throughout the state of Texas, and Patten East fits the bill. The 12-acre property comprises 19 separate low-rise buildings that are made up of a mix of one- and two-bedroom units. It has a courtyard and a clubhouse, with a resident lounge and a Starbucks coffee bar, a 24-hour “cyber lounge,” a fitness center, a saltwater pool, an outdoor kitchen with gas grills and a fireplace, an on-site laundry facility, a dog park and a car charging station, among other offerings, according to the property’s website. 

Wildhorn is planning a renovation of the buildings on the site, the common areas and the interiors of each of the apartment units as leases expire and units become vacant. 

“The asset has been well maintained by the seller and has had a lot of value-add work done in the common areas and on the exteriors, so the focus of this repositioning is to bring the interiors up to a more modern finish,” Hirsh said. 

Monthly rents at the complex range from $970 for one-bedrooms to around $2,300 for two-bedroom units, according to information from Apartments.com.

Wildhorn could not immediately be reached for comment.