AUSTIN, TX - Bluerock Residential Growth REIT announced that it has acquired through a joint venture a 288-unit Class A apartment community in Austin, Texas known as the Fox Hill Apartments.
The Company made an equity investment of $10.16 million to acquire an aggregate 85.3% indirect interest in the joint venture, which acquired Fox Hill for a purchase price of $38.15 million. According to the Company's underwriting assumptions, this is approximately 10% - 20% below replacement cost, and is at a nominal stabilized cap rate that compares favorably to local market cap rates of 5.0% - 5.3%. The Company believes it can achieve a stabilized cap rate of 6.25% by bringing existing rents, which it estimates to be approximately 15.0% below market, up to market. As a result, BRG is projecting in-place AFFO to increase from 8.5% to more than 11.0% on stabilization.
The acquisition was further capitalized with a senior mortgage loan from Walker & Dunlop, LLC in the amount of $26.71 million. The loan has a term of seven years, will bear interest at a fixed rate of 3.57%, and will be interest-only for the first 48 months.
"We are very pleased with the Fox Hill acquisition. This is a case where we had an established relationship with the seller, which allowed us to negotiate directly and come to terms quickly at what we believe to be a very attractive price. Fox Hill is an attractive property with promising upside from enhanced property management," said Ramin Kamfar, Chairman and CEO of Bluerock.
Built in 2010, Fox Hill is a Class A multifamily community featuring one-, two- and three-bedroom unit layouts, averaging 1,066 square feet. The community sits on 44 acres in Austin's Hill Country and features an abundance of amenities including a resort style pool, fitness center, children's playground, sand volleyball court, communal vegetable and herb garden, hiking, biking and walking trails, a dog-park, an outdoor BBQ/fire pit, and business and media centers. The property is located approximately 20 minutes southwest of the Austin Central Business District, and is also in close proximity to the area's office and technology corridors.
Fox Hill is the third multifamily investment in the Austin market by the Company's sponsor, Bluerock Real Estate, L.L.C. since 2010. Other investments included Bluerock's Archstone Tech Ridge and the Meadows Apartments.