By Anca Gagiuc, Associate Editor
Pure Multi-Family REIT LP wants a piece of midtown San Antonio. The company announced it has entered an agreement to acquire Brackenridge at Midtown, a multi-family apartment community with a $51 million price tag.
Brackenridge was built in 2014 and offers 282 luxury residential units averaging 852 square feet. Located just east of Broadway on Brackenridge Avenue, the community is within the same submarket as The Pearl—a commercial area with plenty of nightlife, restaurants, and retail. Major employers have offices within a 2-mile radius including Fort Sam Houston, University of the Incarnate Word, Trinity University, and Downtown San Antonio. HEB, Whataburger, Rackspace, and Zachry Construction have their headquarters in near proximity.
The acquisition of the community is subjected to the satisfaction of the customary conditions precedent and will close on September 30. Pure Multi intends to fund the transaction with proceeds from its bought deal financing which closed on May 8, 2015, proceeds from the previously announced sale of Oakchase Apartment Homes (will close on September 2, 2015), and new first mortgage financing for $30.6 million with a fixed interest rate of 3.72 percent per annum for a term of 12 years. The purchase price represents a stabilized going-in capitalization rate of 5.60 percent.
“We are very excited to add the Brackenridge at Midtown to our existing portfolio. The acquisition increases our exposure in San Antonio, a strong and growing market. The newly constructed Brackenridge asset will bring the average year of construction of our portfolio to 2002, which reflects our strategy of continuing to high-grade our portfolio. By selling one of our oldest assets, Oakchase Apartment Homes (built in 1984) at a 5.80 percent capitalization rate, and using the proceeds on a tax-deferred basis by way of the 1031 like-kind exchange program to acquire a brand-new asset at a 5.60 percent capitalization rate, we continue to create unitholder value organically through strategic upgrading of our portfolio,” said Steve Evans, CEO of Pure Multi.