Case Studies

Austin Value-Add Portfolio + Re-Zone

1,308 Units / 3,700 beds (5 Assets) Multifamily | Austin TX

2014 - 2016

Acquisition Date

3 - 6 Years

Hold Period

$131.6M

Total Capitalization

42.3%

Net IRR

$43.8M

Equity

3.3x

Net Equity Multiple

Description

The Austin Value-add portfolio “The Ballpark Portfolio”is an assemblage of 5 contiguous student housing communities (Ballpark North, Ballpark South, Ballpark East, Ballpark West, Town Lake) located in the explosive growth corridor of East Riverside in Austin Texas. Together, the portfolio consists of 1,308 units or 3,700 student housing beds. Each property is equipped with a full suite of student housing amenities including gated access, resort-style swimming pools, outdoor sporting facilities, grill/picnic areas, fitness center, and study lounges.

Location

Ballpark North: 4600 Elmont Dr, Austin, TX 78741

Ballpark West: 1600 Wickersham Ln, Austin, TX 78741

Ballpark East: 1515 Wickersham Ln, Austin, TX 78741

Ballpark South: 4700 E Riverside Dr. Austin, TX 78741

Towne Lake: 1109 S Pleasant Valley Rd, Austin, TX 78741

Opportunity & Execution

Execution: Value Add + Re-zone

Deal Source: Off-market

Part of a long-term investment strategy to acquire contiguous property in an area well positioned to capitalize on Austin’s explosive growth and path of gentrification

Acquired off-market through proprietary relationships at a price below market levels

Designed and executed capital improvement plan focused on unit interiors and exterior/infrastructure rehabilitation

The team on the ground shadow property-managed the portfolio – very hands-on investment style with in-house construction management

Realized value-creation (Improved operational cash flow by 80%) provided for the ability to re-finance out a significant portion of the invested equity in less than 3 years

Part of a 100-acre assemblage adjacent to downtown Austin that the team re-zoned from 1M SF to 9M SF

Re-zone & Value Creation

The asset acquisitions were part of a strategic 100-acre land assemblage
Area adjacent to downtown Austin and Oracle HQ; minutes away from Austin-Bergstrom International Airport
Re-zoned from 1M SF of existing residential to 9M SF of mixed-use developable space
It was recorded as the largest re-zone in the urban core of Austin at the time
Envisioned & marketed opportunity for a large-scale mixed-use redevelopment opportunity
Realized value-creation + re-zone allowed the team flexibility to exit to a broader pool of buyers (value-add + developers) – project was ultimately sold as a cash-flowing covered land play, and today is a $4B re-development

Urban Palms

659 Unit Multifamily | Houston TX

Jul 2016

Acquisition Date

3 Years

Hold Period

$41.1M

Total Capitalization

25.0%

Net IRR

$11.6M

Equity

1.9x

Net Equity Multiple

Description

Urban Palms is a 659-unit multifamily asset located in the Sharpstown submarket of Houston, Texas near the intersection of Gessner Road and Westpark Tollway (inside the Beltway). The asset consists of 52 two-story garden style residential buildings and includes a diversified set of community amenities including gated access, 2 swimming pools, a playground, grill/picnic area, fitness center, and business center.

Location

8701 Town Park Dr, Houston, TX 77036

Opportunity & Execution

Execution: Value Add

Deal Source: Off-market

The depth of experience and relationships inside and in the surrounding submarkets lead to an off-market acquisition at a significant discount to an otherwise fully marketed value.

The asset presented a unique value-add opportunity with 75% of the units unimproved, infrastructure deficiencies, and poor in-place management.

Capitalized on untapped upside by implementing CAPEX plan including replacing floors, countertops, appliances, light/fan fixtures, and upgrading cabinets

Leveraged the asset’s location near major employment centers and in the expected path of improvement to consistently drive rent growth

Replace existing management with an experienced operator to better manage leasing operations and improve property’s online and offline perception through effective management

Three Corners Portfolio

3 Asset - 1,103 Unit Multifamily | Houston TX

Apr 2015

Acquisition Date

3.3 Years

Hold Period

$82.4M

Total Capitalization

26.6%

Net IRR

$16.0M

Equity

2.0x

Net Equity Multiple

Description

The “Three Corners Portfolio” is comprised of 3 adjacent multifamily assets (Three Corners North, West, East) totaling 1,103 units located in the Spring Branch neighborhood in Northwest Houston inside the beltway, north of I-10 and just 3.5 miles north of the City Center, a residential/retail/hospitality mixed-use project. The portfolio assets offer a balanced blend of urban and suburban surroundings. Each asset provides a convenient set of community amenities including gated access, 2 swimming pools, a playground, grill/picnic area, dog park, fitness center, and business center.

Location

9999, 10010, 10105 Kempwood Drive, Houston, TX 77080

Opportunity & Execution

Execution: Value Add

Deal Source: Relationship based (fully marketed)

Opportunistically acquired 3 adjacent assets from an institutional seller at a price well below replacement cost during a temporary market decline after short-term drop in oil prices

Designed and executed capital improvement plan focused on unit interiors and exterior/infrastructure rehabilitation producing outsized ROI on invested CAPEX

Implemented an aggressive shadow property management initiative resulting in entirely re-staffing the property and overhauling the leasing & maintenance protocols

Sold the portfolio into a recovered market 3.3 years, achieving above market average annual cash on cash yield over the life of the hold.

Regional Distribution Center

17.8 Acre Acre Industrial Asset | Las Vegas, NV

Aug 2021

Acquisition Date

1.2 Years

Hold Period

$25.9M

Total Capitalization

76.7%

Net IRR

$9M

Equity

1.8x

Equity Multiple

Description

State of the art regional distribution center 100% occupied by a leading national plumbing distributor situated on 17.8 acres in the highly desirable Henderson submarket of Las Vegas Nevada with convenient access to I-95 and I-215. The property was originally built in 2007 and consists of 2 buildings, 104,529 SF of Net Rentable Area, 94 parking spaces, and 85% of lot available for outdoor storage.

Location

501 Parkson Avenue, Henderson, NV 78640

Opportunity & Execution

Execution: Thematic Investment

Deal Source: Off-market

Opportunistically sourced deal off-market through a local relationship and successfully acquired at a purchase price significantly below market value
Seller received an unsolicited offer ~10% higher than the purchase price during the contract period
100% occupied by a credit tenant, Ferguson Enterprises
17.8 acre site with only 104,529 sf of building, 13.63% lot coverage which presented the opportunity for further development upside
The property is well positioned to capitalize on the warehousing and distribution convergence of Southern Nevada, Southern California, Northwest Arizona, and Southwest Utah.
Drove 7.2% annual cash on cash yield over the life of the hold period

Land Bridge Loan

Austin MSA | Austin, TX

Description

Palladius provided a short-term bridge loan to a fully entitled mixed-use (multifamily & retail) land site in Austin, TX. The site has core adjacency to multiple transformative development projects currently under construction. The borrower is an experienced ownership group and the site is covered with short-term industrial tenants to provide cash-flow pre-development.

Austin, TX

Location

Land

Bridge Loan

$7.4MM

Loan Amount

40%

LVT (as-is)

10.0%

Interest Rate

8 Mo.

Loan Team

Preferred Equity Investment

Houston MSA | Houston, TX

Description

Palladius provided a preferred equity investment with a detachment point below $150K/unit for the construction of 336 multifamily units in a growing submarket of NW Houston and adjacency to a Walmart Supercenter. The developer is an experienced owner/operator of multifamily and retail in the Houston MSA.

Houston, TX

Location

Multifamily

Construction

$11.1MM

Loan Amount

80%

Detach LTC

11.5%

Interest Rate

36 Mo.

Loan Team