Property Details
Below Market Rents  Repositioning Opportunity  NOI Growth 
Asset Profile
Value Add

CSC Texas Portfolio II

Austin & San Antonio, TX

Multi-Family Property

This deal is oversubscribed

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Cooper Street Capital San Francisco, CA
Cooper Street Capital
  • IRR 16.8%
  • Equity Multiple 1.55x
  • Hold Period 3Y
  • Minimum Investment $25K
  • Year 1 Cash on Cash 7.2%
  • Stabilized Cash on Cash 8.8% in Y3
  • First Distribution Jul 2020
  • Distribution Frequency Quarterly
  • Co-Investment 11%
  • Preferred Return 10%
  • Investor Profit Share 70%
  • Asset Profile Value Add
  • Loan-to-Value 78%
  • Current Occupancy 94%

About this Property

Property Addresses 1221 Algarita Ave, Austin, TX
1301 W Ben White Blvd, Austin, TX
901 W Silver Sands Dr, San Antonio, TX
Square Footage 264,063 sq. ft.
# of Units 377
Year Built 1969, 1971, 1979
Year Remodeled 2018-19
Current Occupancy 94%
Market Occupancy 94%
Purchase Price $46,760,000
Price/SF $177
Stabilized Loan to Value 67%

Why you are buying these Properties?

Cooper Street Capital (“CSC”) is selling a small percentage of its company ownership in each of the three assets in the CSC Texas Portfolio II in order to free up capital and to find additional acquisitions for partners. CSC has owned and operated Banister Place for the past two years, while CSC has acquired Cascade and Chestnut Park Apartments this fall. Each of the major Texas markets are proving to be increasingly difficult metro areas to find strong investment projects, given large capital in-flows chasing the markets’ growth, and this portfolio will give more investment opportunity to CSC's partners.

 

What is your investment strategy/business plan for this Portfolio?

At the heart of the strategy for the CSC Texas Portfolio II is the opportunity to (1) isolate and address the mismanagement that existed at the Cascade and Chestnut Park Apartments upon takeover, and (2) to implement a capital repairs program at each of the assets, with the highest finishes, to enhance each of the assets’ superior presentation and amenities. With a large Texas presence (nearly 2,000 units), and strong regional and operational teams in place, CSC, and its in-house property management company CSC Management, will be able to take advantage of increasingly available economies of scale.

 

What are the first 3 steps you will take to maximize cashflow and property value?

  1. Each of these three assets contains elements of its physical presentation and resident experience that can be enhanced to drive traffic, sustain occupancy, and maximize cash flow. The primary value added to the Cascade and Chestnut Park Apartments will be installing washer and dryers to each and every unit. This amenity is in high demand across both markets, and many assets in the respective surrounding areas do not offer this amenity, allowing for a distinctly differentiating factor for many potential tenants.
  2. In addition, the operations in place at Cascade and Chestnut Park also contain elements that CSC can target to lower expenses and increase resident retention. The previous owners of the Cascade and Chestnut Park recycled through third-party property management firms to stabilize occupancy. As a vertically integrated real estate company, CSC does not contract third party management companies, and as a result, CSC's operations team are able to execute on expense management, resident retention, and marketing strategies directly with members of CSC's on-site staff.
  3. Lastly, CSC was able to obtain bridge financing for Cascade and Chestnut Park. Historically, bridge financing has been relatively more expensive than traditional senior loans. Recently, however, bridge-financing pricing has dropped considerably, allowing CSC to capitalize on lower interest rate costs, while also allowing CSC to optimize the flexibility to exit these loans, most importantly without paying significant defeasance costs, through a sale or refinance.

 

What are the 3 most important aspects of this investment opportunity for the investors?

The strength of this investment opportunity is rooted in several key items:

  1. First, by completing the value-add renovation schedule at each of the three assets, CSC believes that they can continue to take advantage of these assets' superior central locations and the overall and continued growth in Austin and San Antonio order to sustain cash flow and create value in the medium term,
  2. The CSC Texas Portfolio II will provide immediate diversification across markets and across three assets with varying degrees of value-add rehab remaining, and
  3. CSC’s large operational presence in Texas allows for increased economies of scale and notable market understanding.

 

Are there any unique aspects to the property, your investment strategy or this Offering that will help create value for investors?

With the investment strategy for each of the three assets, and in today’s market climate, CSC believes the CSC Austin Portfolio II is an opportunity to capture upside potential with adequate downside risk protection and diversification. Each of the three assets is in a different period in its value-add rehabilitation program, providing for a balance to investors between cash flow and upside potential to drive up the NOI. Bannister Place, having a significant portion of the renovations completed, is on fixed-financing that will provide for a base and steady cash flows to the portfolio at the outset. The Cascade Apartments and the Chestnut Park Apartments, in a slight change, have both received considerable exterior upgrades (by the previous owners), but the bulk of the interior upgrades have yet to be completed. CSC’s research indicates that the installation of washer/dryers in each and every unit at both assets will provide for a living experience and amenity package to each that is difficult to compete within each market.

How are risks being mitigated during the hold period?

CSC believes there are three main risks associated with the CSC Texas Portfolio II of note: 1) interest rate risk, 2) construction risk, and 3) operational risk.

  1. With three separate loans in this portfolio, two of which are on variable financing, interest rate movements will affect the costs of the financing over the hold. Fortunately, Bannister Place has fixed-rate financing in place, and with three separate loans, investors risk from the financing is spread across the three, rather than concentrated into one loan. As a further mitigant to the increase in interest rates, CSC purchased rate caps on each bridge loan to place a ceiling on the maximum interest rate payable.
  2. Second, Cascade and Chestnut Park represent larger scale value-add projects with considerable upgrades needing to be completed over the hold. CSC has implemented several programmatic multifamily upgrades in the past, as seen in the Creeks Edge case study, and are confident in the on-site team’s ability to work through the renovation schedule in a timely manner.
  3. Finally, as mentioned, two of the assets, Cascade and Chestnut Park will require revamping the in-place operations in order to sustain occupancy into the medium term. As previously mentioned, CSC is a vertically integrated company, owning and operating nearly 2,000 units in Texas. With this infrastructure, CSC has in-place a strong and experienced regional manager who will oversee the portfolio while also providing the CSC team with detailed our market knowledge.

About this Property

Property Addresses 1221 Algarita Ave, Austin, TX
1301 W Ben White Blvd, Austin, TX
901 W Silver Sands Dr, San Antonio, TX
Square Footage 264,063 sq. ft.
# of Units 377
Year Built 1969, 1971, 1979
Year Remodeled 2018-19
Current Occupancy 94%
Market Occupancy 94%
Purchase Price $46,760,000
Price/SF $177
Stabilized Loan to Value 67%

Why you are buying these Properties?

Cooper Street Capital (“CSC”) is selling a small percentage of its company ownership in each of the three assets in the CSC Texas Portfolio II in order to free up capital and to find additional acquisitions for partners. CSC has owned and operated Banister Place for the past two years, while CSC has acquired Cascade and Chestnut Park Apartments this fall. Each of the major Texas markets are proving to be increasingly difficult metro areas to find strong investment projects, given large capital in-flows chasing the markets’ growth, and this portfolio will give more investment opportunity to CSC's partners.

 

What is your investment strategy/business plan for this Portfolio?

At the heart of the strategy for the CSC Texas Portfolio II is the opportunity to (1) isolate and address the mismanagement that existed at the Cascade and Chestnut Park Apartments upon takeover, and (2) to implement a capital repairs program at each of the assets, with the highest finishes, to enhance each of the assets’ superior presentation and amenities. With a large Texas presence (nearly 2,000 units), and strong regional and operational teams in place, CSC, and its in-house property management company CSC Management, will be able to take advantage of increasingly available economies of scale.

 

What are the first 3 steps you will take to maximize cashflow and property value?

  1. Each of these three assets contains elements of its physical presentation and resident experience that can be enhanced to drive traffic, sustain occupancy, and maximize cash flow. The primary value added to the Cascade and Chestnut Park Apartments will be installing washer and dryers to each and every unit. This amenity is in high demand across both markets, and many assets in the respective surrounding areas do not offer this amenity, allowing for a distinctly differentiating factor for many potential tenants.
  2. In addition, the operations in place at Cascade and Chestnut Park also contain elements that CSC can target to lower expenses and increase resident retention. The previous owners of the Cascade and Chestnut Park recycled through third-party property management firms to stabilize occupancy. As a vertically integrated real estate company, CSC does not contract third party management companies, and as a result, CSC's operations team are able to execute on expense management, resident retention, and marketing strategies directly with members of CSC's on-site staff.
  3. Lastly, CSC was able to obtain bridge financing for Cascade and Chestnut Park. Historically, bridge financing has been relatively more expensive than traditional senior loans. Recently, however, bridge-financing pricing has dropped considerably, allowing CSC to capitalize on lower interest rate costs, while also allowing CSC to optimize the flexibility to exit these loans, most importantly without paying significant defeasance costs, through a sale or refinance.

 

What are the 3 most important aspects of this investment opportunity for the investors?

The strength of this investment opportunity is rooted in several key items:

  1. First, by completing the value-add renovation schedule at each of the three assets, CSC believes that they can continue to take advantage of these assets' superior central locations and the overall and continued growth in Austin and San Antonio order to sustain cash flow and create value in the medium term,
  2. The CSC Texas Portfolio II will provide immediate diversification across markets and across three assets with varying degrees of value-add rehab remaining, and
  3. CSC’s large operational presence in Texas allows for increased economies of scale and notable market understanding.

 

Are there any unique aspects to the property, your investment strategy or this Offering that will help create value for investors?

With the investment strategy for each of the three assets, and in today’s market climate, CSC believes the CSC Austin Portfolio II is an opportunity to capture upside potential with adequate downside risk protection and diversification. Each of the three assets is in a different period in its value-add rehabilitation program, providing for a balance to investors between cash flow and upside potential to drive up the NOI. Bannister Place, having a significant portion of the renovations completed, is on fixed-financing that will provide for a base and steady cash flows to the portfolio at the outset. The Cascade Apartments and the Chestnut Park Apartments, in a slight change, have both received considerable exterior upgrades (by the previous owners), but the bulk of the interior upgrades have yet to be completed. CSC’s research indicates that the installation of washer/dryers in each and every unit at both assets will provide for a living experience and amenity package to each that is difficult to compete within each market.

How are risks being mitigated during the hold period?

CSC believes there are three main risks associated with the CSC Texas Portfolio II of note: 1) interest rate risk, 2) construction risk, and 3) operational risk.

  1. With three separate loans in this portfolio, two of which are on variable financing, interest rate movements will affect the costs of the financing over the hold. Fortunately, Bannister Place has fixed-rate financing in place, and with three separate loans, investors risk from the financing is spread across the three, rather than concentrated into one loan. As a further mitigant to the increase in interest rates, CSC purchased rate caps on each bridge loan to place a ceiling on the maximum interest rate payable.
  2. Second, Cascade and Chestnut Park represent larger scale value-add projects with considerable upgrades needing to be completed over the hold. CSC has implemented several programmatic multifamily upgrades in the past, as seen in the Creeks Edge case study, and are confident in the on-site team’s ability to work through the renovation schedule in a timely manner.
  3. Finally, as mentioned, two of the assets, Cascade and Chestnut Park will require revamping the in-place operations in order to sustain occupancy into the medium term. As previously mentioned, CSC is a vertically integrated company, owning and operating nearly 2,000 units in Texas. With this infrastructure, CSC has in-place a strong and experienced regional manager who will oversee the portfolio while also providing the CSC team with detailed our market knowledge.

Offered By

Cooper Street Capital

Cooper Street Capital

San Francisco, CA

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Assets Under
Management

Currently
$376.07MM 10+ assets
Exited
$84.81MM 20+ assets
Portfolio LTV
64%  
Historical
Realized Returns

Total IRR
28.8%  
Equity Multiple
2.14x  
Annual Cash
8.7%  
Years Of
Experience

As Principals
20+ years  
In Business
7 years  
Size
9 Staff * Dedicated investor relations
* All information is reported by Cooper Street Capital as of 10/1/2019.
Assets Under
Management

Currently
$376.07MM 10+ assets
Exited
$84.81MM 20+ assets
Portfolio LTV
64%  
Historical
Returns

Total IRR
28.8%  
Equity Multiple
2.14x  
Annual Cash
8.7%  
Years Of
Experience

As Principals
20+ years  
In Business
7 years  
Size
9 Staff * Dedicated investor relations
* All information is reported by Cooper Street Capital as of 10/1/2019.

Financials

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Location Details

Austin & San Antonio, TX

Located in two neighborhoods on the south side of Austin, Bannister Place and Cascade are located close to several large tech campuses, such as Oracle and Intel, while also close to the downtown area and the University of Texas at Austin. South Lamar, where Bannister Place is located, and Travis Heights, Cascade’s neighborhood, have seen tremendous growth over the last ten years due to their proximity to the City’s major amenities and attractions. The CSC Texas Portfolio project will be carried out against the backdrop of a city recently named the number one city for real estate projects by PWC’s Emerging Trends in Real Estate 2020.

Chestnut Park is situated in the popular North Central Neighborhood of San Antonio. This centralized area is known for its many bars, restaurants, and parks and also many of the city’s biggest economic drivers, including a state university and the medical district. Since the start of 2015, over 100,000 jobs have been created in the area with tech firms such as Hulu announcing an expanding presence in San Antonio.

Documents

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Offering Agreement Documents

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