Investor wants to funnel $100M-plus into apartment deals in the Austin suburbs

Originally published by the Austin Business Journal. View original article here.

An investor out of Washington, D.C., wants to make a big splash in the Austin-area apartment market.

RSE Capital Partners has closed on two multifamily deals, one in Cedar Park and one in Pflugerville, and is already eyeing a third in Leander. The firm says it wants to pour more than $100 million into the Central Texas multifamily market over the next two years.

It inked a deal with North American Properties in May to to build a four-story, mixed-use development at 1910 Quest Pkwy. in Cedar Park. Called Quest, the project will have 333 units and 11,000 square feet of ground-floor amenities and services.

Cincinnati-based North American Properties is the in-house general contractor for the project. Construction is expected to wrap up in the third quarter of 2020. The developer has several projects in Texas, including Lakeline East in Cedar Park.

Quest will be off a busy corridor, West Whitestone Boulevard, near the Highway 183A toll road. It’s not far from a few restaurants, a Baylor Scott & White clinic plus HEB, Costco and Whole Foods. The site is adjacent to a new police headquarters, a library and an outdoor amphitheater and public park.

It’s exactly the type of product RSE Capital wants to help develop: new apartments in the suburbs or peripheral locations that are still close to major community hubs, retail and schools.

“The strategy is to really build 'amenitized' projects where you can build bigger units because the land base is not crazy (high) but it’s still located in … a focal point in the community, where you could conceivably stretch out and have kids with great schools,” said Max Kirschenbaum, head of business development for RSE Capital Partners.

RSE Capital declined to provide the dollar value for the Quest deal. However, North American Properties took out a $29.8 million construction loan with Regions Bank for the project, according to Williamson County Clerk records. Andy Murray of Summer Street Advisor arranged RSE’s preferred equity investment in the project. Regions Bank provided senior debt financing.

In September, RSE closed on a deal with Waypoint Residential for a new 324-unit apartment project in the Falcon Pointe community in Pflugerville. Called Estraya at Falcon Pointe, the project is leasing up for rents ranging from $974 to $3,416 monthly, according to Estraya’s website.

Texas Capital Bank provided senior debt financing for the Pflugerville project at 2132 Falcon Ridge Lane.

RSE Capital Partners has invested $1 billion in commercial real estate since launching 2016 as the investment arm of the online platform Fundrise. It focuses on the origination, underwriting, investment and management for Fundrise’s eREIT platform.

It invests in multifamily acquisitions, multifamily developments, for-sale housing and bridge construction lending. This year the company said it wants to invest $300 million in projects.

In Austin, RSE Capital is mostly focusing on building new developments in the suburbs, Kirschenbaum said. Typically through its partnerships, RSE Capital Partners invests between $5 million and $50 million in any one project.

“We are targeting $100 million [or more] exposure in the market over the next two years, and expect the demographic and job growth upwinds to continue. We have been largely focused on North Austin neighborhoods,” he added in an email.

Copyright © 2020 RSE Capital Partners. All Rights Reserved.