The Quail Creek Apartments (“QC”) was built in 1983 and is comprised of 43 one-bedroom units, and a single two-bedroom unit. QC’s location is proximate to Austin’s major transportation arteries and approximately five miles north of Downtown Austin.  We favorably viewed the outstanding employment base within 10-mile radius of the Property comprising 163,048 jobs, including state agencies, The University of Texas and hospitality industry (i.e. Hotels, restaurants, bars, etc.) We acquired QC from a distressed seller, which provided an opportunistic buy below replacement cost, and in a trade area where rents and occupancy figures were trending upwards, indicating a mispricing as a result of the seller’s need to liquidate. The Property was under-managed and required repair of deferred maintenance items, including the phased and strategic renovation of interior unit upgrades.

Our research also indicated that competing assets in the trade area had recently undergone renovations and thereafter were achieving significantly higher rents.  Accordingly, we immediately pursued our repositioning plan following acquisition, which resulted in a 9% increase in rental rates inside of a year.  A recapitalization of QC was undertaken within a year of our acquisition to facilitate the liquidity needs of original LP investors.  Despite selling via the recap, and well before the expected investment holding period, the original LPs nearly achieved the targeted 18% IRR. Since the recapitalization, we executed two refinancings of the Property, resulting in a repatriation of 71% of investor equity (post-recap) that has also produced outsized cash-on-cash returns.   In Q418, we executed a sale/recap of the Property with a family office of a preeminent private equity investor resulting in a compelling risk-adjusted return to the outgoing HNW investor.