COLLEGE STATION, TX—The acquisition of the 192-unit Element at University Park is a study in how lending continues even in a challenging environment. Miami-based One Real Estate Investment/OREI, a real estate investment and asset management firm, recently acquired the property for an undisclosed purchase price.
Berkadia originated a 10-year Freddie Mac floating-rate loan for the property. Senior managing director Mitch Sinberg of Berkadia's Boca Raton office and managing director Brad Williamson of Berkadia's Miami office secured the senior loan on behalf of OREI.
The Berkadia joint venture equity and structured capital group in New York led by Chinmay Bhatt, Noam Franklin and Cody Kirkpatrick lined up an institutional quality equity partner to complete the equity stack with a preferred equity investment through Electra Capital of $4.09 million for 36 months. This investment was structured behind the first mortgage through Freddie Mac and allows the sponsor to purchase the property and complete planned renovations, including interior renovations to each unit and exterior renovations to the buildings and grounds.
"Electra Capital is one of the few sources of capital that continues to be active in today's challenging economic climate, and we're looking forward to continuing to provide capital solutions for multifamily partners throughout the Southeast and Texas in the months ahead," said Samuel J. Greenblatt, Electra Capital's CEO. "Due to the property's strong location and the sponsor's track record of executing on multifamily value-add opportunities, Electra was able to structure an aggressive deal in a short timeframe that met the sponsor's needs."
Berkadia's Franklin concurs that the speed in which Electra executed the funding was a critical piece of the puzzle.
"Electra Capital was able to move very quickly on this opportunity and gave OREI a lot of confidence that they would be able to close this transaction in a timely manner, even during the current COVID crisis," Franklin tells GlobeSt.com. "It was crucial to identify a capital partner for One Real Estate Investment that would be able to close in a timely manner, during COVID, and we had a lot of confidence that Electra Capital would step up to ensure OREI that they were partnering with the right group."
Built in 2000, Element at University Park is situated at 4475 Carter Creek Pkwy., less than 10 minutes away from Texas A&M University–College Station's economic driver.
"College Station's propitious market offers a compelling opportunity to tap into Texas A&M's 70,000 students, which make up more than half of College Station's general population," said Williamson.
While issues resulting from COVID were a part of the acquisition process, the asset's upside was more than enough to tip the scales for a successful closing.
"Although this transaction presented new challenges in a unique investment climate, Element at University Park is an excellent acquisition for OREI's growing market rate portfolio," adds Jeronimo Hirschfeld, CEO of OREI. "The property has significant upside potential in terms of interior renovations and exterior amenities. The asset benefits from close proximity to not only the United States' second-largest university, but also a diverse mix of healthcare employers."
Further south in the Houston metro, multifamily development will also be strong west of the core in Katy where 2,700 garden-style units will be delivered as builders attempt to keep stride with robust household formation, according to an IPA report. Katy has one of the tightest vacancy rates in the metro at 5%, trailing several northern suburbs such as Cypress, Conroe and The Woodlands. Vacancy in these suburban cities will also likely remain compressed this year as construction in these areas remains limited.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
