Property Details
Stabilized Occupancy  Below Market Rents 
Asset Profile
Value Add

Hunt Club - Austin, TX

Austin, TX

Multi-Family Property
Polaris Real Estate Partners San Francisco, CA
Polaris Real Estate Partners
  • IRR 18.8%
  • Equity Multiple 2.28x
  • Hold Period 5-7Y
  • Minimum Investment $25K
  • Year 1 Cash on Cash N/R
  • Stabilized Cash on Cash 8.09% Y4
  • First Distribution Sep 2023
  • Distribution Frequency Quarterly
  • Co-Investment 8.5% ($2.2MM)
  • Preferred Return 6%
  • Investor Profit Share See Financials
  • Asset Profile Value Add
  • Loan-to-Value 73%
  • Current Occupancy 95.5%

About this Property

"Stabilized, 384-unit Value-Add multifamily investment with significant upside in North Austin, TX – 128.5% total return, 25.7% annualized return projected."

-Travis Pacoe, Polaris Real Estate Partners

 

Address 3101 Shoreline Drive
Square Footage 319,120 sq. ft.(1)
# of Units 384
Year Built 1986
Year Renovated 2008
Current Occupancy 95.5%
Market Occupancy 96%
Current Average Rents $1,273
Average Market Rents $1,445
Purchase Price $77,750,000
Price/Sq. Ft. $243.65(1)
Stabilized Loan to Value 53%
(1) Net Rentable Square Footage

Top Questions

All answers are provided by the sponsor, Polaris Real Estate Partners, or its representatives.

 

Why are you buying this property?

Travis Pacoe, Polaris Real Estate Partners: "Hunt Club is a 384-unit multifamily asset located in one of the strongest and fastest growing rental property markets in the country. The property sits on 17 acres in the North Austin submarket of Wells Branch, a suburban neighborhood located between the MoPac Expressway and Interstate-35, two of Austin’s major transportation arteries. Hunt Club has quick access to both recreation and employment centers in the rapidly expanding submarkets of North and Northwest Austin, including a 10-minute drive to The Domain, Austin’s premiere retail hub and “Second Downtown.” The community is positioned about 20 minutes from downtown Austin and 10 minutes from downtown Round Rock, the region’s two major business districts."

"Hunt Club’s in-place rents are significantly below market rates. The average rent per foot for all leases at Hunt Club is $1.41 - $1.61; asking rents for units at comparable properties nearby average $1.94 - $2.19 per foot, a premium of 36% to 38%. Polaris believes that upgrading Hunt’s units to a more contemporary finish and design will allow the property to achieve its neighbors’ rent levels or higher given the setting and proximity to desirable destinations. The last 20 leases at Hunt Club as of 7/11 have leased for an average premium of $425 over the average of all other leases. This equates to a rental income upside of $1,856,400 annually on remaining leases and an equity upside of $37,128,000. Market rents could stay flat for the duration of Hunt’s projected investment period and Polaris would still exceed targeted investor returns by simply raising the remaining in-place rents to those of the recently rented units. The average in-place rent at Hunt is $1,273, versus the average Austin asking rent of $2,245. Rent levels in Austin increased 35% for the year ended January 2022, 133% greater than the national average of 15%."

 

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

Travis Pacoe, Polaris Real Estate Partners:

  • "The last 60 leases have leased for an average premium of $393 over the average of the 324 older leases. This equates to a rental income upside of $1,526,992; divided by a 5 CAP, this represents $30,539,840 in equity upside. Only 2 of the 384 units at Hunt Club have been renovated."
  • "The property’s in-place rents are 38% to 42%, or $0.57 – $0.60 per foot, below those of nearby competing properties."
  • "Hunt Club is located within Wells Branch, a suburban community catering to young professionals and families, 20 minutes north of downtown Austin and 10 minutes south / 5 miles from downtown Round Rock."
  • "There are 146K jobs employed by 11.5K businesses within 5 miles of the property."
  • "Polaris is buying at $210.9K per unit, approximately 64% of replacement cost. If the property’s parcel were to be redeveloped, however, it would be as mid-rise multifamily. Polaris estimates that the parcel would accommodate at least 830 units if redeveloped."

 

What is your investment strategy/business plan?

Travis Pacoe, Polaris Real Estate Partners: "Hunt Club’s rents are significantly below market rates, with leases being 38% to 42% lower per square foot than its competitors. Current ownership has done minimal upgrades to the property with all but two units remaining in classic condition. Even so, the last 60 leases leased for an average premium of $393 over the prior 324 lease average. In turn, there is clear potential at Hunt Club to increase rental income and other income levels. To do so, Polaris will upgrade all of Hunt’s units to a more contemporary finish and design that will allow the property to achieve its neighbor’s rent levels or higher given the assets desirable location. Polaris believes that there is also substantial additional income potential at Hunt Club through both the upgrade and addition of numerous amenities to the property."

"Polaris will upgrade or add numerous resident amenities to significantly improve the resident experience. Based on Polaris’ history, this in addition to Polaris' wide-ranging social impact programs will increase the property's attraction and competitive edge to potential residents while also increasing resident retention. Resident amenities to be improved include renovation of the clubhouse and business center, improvement to the on-site dog park, fitness center upgrade, and pool area improvement. Finally, Polaris will re-brand the property with a new name, logo, and exterior cosmetic upgrade to give it a more contemporary appearance."

 

How has COVID-19 impacted your business plan?

Travis Pacoe, Polaris Real Estate Partners: "It has not."

 

What are the risks and how are you mitigating those risks?

Travis Pacoe, Polaris Real Estate Partners: "Although it is clear that the US economy and that of Austin is recovering from the 2020 recession, Polaris has paid close attention to the impact that high vacancy can have on this property's income and profitability. Because Hunt Club’s rents are significantly below market rates, the property is well insulated from economic downturn. Even with significant rent increases within the first years of ownership, Hunt Club’s rents will remain below market rates through year three. One of Polaris’ primary underwriting criteria has always been a target property's ability to withstand unusually high vacancy over a prolonged period with continued expense increases over time. Additionally, Polaris obtains fixed rate debt, or variable rate debt with a cap on the amount the interest rate can increase. Applying this pressure test to Hunt Club, the property can withstand a vacancy of 15% for five years without experiencing negative cash flow after payment of all expenses and mortgage payments."

"Polaris will be using the same management company for Hunt Club as it does for its other three Austin assets, all of which have exceeded Polaris’ financial projections. Furthermore, Polaris’ Director of Asset Management is based out of Dallas, giving ownership quick and direct access to the property. Additionally, Polaris holds back substantial cash reserves in the event of unusual physical capital needs arise or distress at the property level. This proved critical during the Pandemic, when a major capital need arose from time to time at PREP's properties while income was down substantially from delayed rent payment."

 

NOTE: All answers provided by the sponsor, Polaris Real Estate Partners, or its representatives.

About this Property

"Stabilized, 384-unit Value-Add multifamily investment with significant upside in North Austin, TX – 128.5% total return, 25.7% annualized return projected."

-Travis Pacoe, Polaris Real Estate Partners

 

Address 3101 Shoreline Drive
Square Footage 319,120 sq. ft.(1)
# of Units 384
Year Built 1986
Year Renovated 2008
Current Occupancy 95.5%
Market Occupancy 96%
Current Average Rents $1,273
Average Market Rents $1,445
Purchase Price $77,750,000
Price/Sq. Ft. $243.65(1)
Stabilized Loan to Value 53%
(1) Net Rentable Square Footage

Top Questions

All answers are provided by the sponsor, Polaris Real Estate Partners, or its representatives.

 

Why are you buying this property?

Travis Pacoe, Polaris Real Estate Partners: "Hunt Club is a 384-unit multifamily asset located in one of the strongest and fastest growing rental property markets in the country. The property sits on 17 acres in the North Austin submarket of Wells Branch, a suburban neighborhood located between the MoPac Expressway and Interstate-35, two of Austin’s major transportation arteries. Hunt Club has quick access to both recreation and employment centers in the rapidly expanding submarkets of North and Northwest Austin, including a 10-minute drive to The Domain, Austin’s premiere retail hub and “Second Downtown.” The community is positioned about 20 minutes from downtown Austin and 10 minutes from downtown Round Rock, the region’s two major business districts."

"Hunt Club’s in-place rents are significantly below market rates. The average rent per foot for all leases at Hunt Club is $1.41 - $1.61; asking rents for units at comparable properties nearby average $1.94 - $2.19 per foot, a premium of 36% to 38%. Polaris believes that upgrading Hunt’s units to a more contemporary finish and design will allow the property to achieve its neighbors’ rent levels or higher given the setting and proximity to desirable destinations. The last 20 leases at Hunt Club as of 7/11 have leased for an average premium of $425 over the average of all other leases. This equates to a rental income upside of $1,856,400 annually on remaining leases and an equity upside of $37,128,000. Market rents could stay flat for the duration of Hunt’s projected investment period and Polaris would still exceed targeted investor returns by simply raising the remaining in-place rents to those of the recently rented units. The average in-place rent at Hunt is $1,273, versus the average Austin asking rent of $2,245. Rent levels in Austin increased 35% for the year ended January 2022, 133% greater than the national average of 15%."

 

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

Travis Pacoe, Polaris Real Estate Partners:

  • "The last 60 leases have leased for an average premium of $393 over the average of the 324 older leases. This equates to a rental income upside of $1,526,992; divided by a 5 CAP, this represents $30,539,840 in equity upside. Only 2 of the 384 units at Hunt Club have been renovated."
  • "The property’s in-place rents are 38% to 42%, or $0.57 – $0.60 per foot, below those of nearby competing properties."
  • "Hunt Club is located within Wells Branch, a suburban community catering to young professionals and families, 20 minutes north of downtown Austin and 10 minutes south / 5 miles from downtown Round Rock."
  • "There are 146K jobs employed by 11.5K businesses within 5 miles of the property."
  • "Polaris is buying at $210.9K per unit, approximately 64% of replacement cost. If the property’s parcel were to be redeveloped, however, it would be as mid-rise multifamily. Polaris estimates that the parcel would accommodate at least 830 units if redeveloped."

 

What is your investment strategy/business plan?

Travis Pacoe, Polaris Real Estate Partners: "Hunt Club’s rents are significantly below market rates, with leases being 38% to 42% lower per square foot than its competitors. Current ownership has done minimal upgrades to the property with all but two units remaining in classic condition. Even so, the last 60 leases leased for an average premium of $393 over the prior 324 lease average. In turn, there is clear potential at Hunt Club to increase rental income and other income levels. To do so, Polaris will upgrade all of Hunt’s units to a more contemporary finish and design that will allow the property to achieve its neighbor’s rent levels or higher given the assets desirable location. Polaris believes that there is also substantial additional income potential at Hunt Club through both the upgrade and addition of numerous amenities to the property."

"Polaris will upgrade or add numerous resident amenities to significantly improve the resident experience. Based on Polaris’ history, this in addition to Polaris' wide-ranging social impact programs will increase the property's attraction and competitive edge to potential residents while also increasing resident retention. Resident amenities to be improved include renovation of the clubhouse and business center, improvement to the on-site dog park, fitness center upgrade, and pool area improvement. Finally, Polaris will re-brand the property with a new name, logo, and exterior cosmetic upgrade to give it a more contemporary appearance."

 

How has COVID-19 impacted your business plan?

Travis Pacoe, Polaris Real Estate Partners: "It has not."

 

What are the risks and how are you mitigating those risks?

Travis Pacoe, Polaris Real Estate Partners: "Although it is clear that the US economy and that of Austin is recovering from the 2020 recession, Polaris has paid close attention to the impact that high vacancy can have on this property's income and profitability. Because Hunt Club’s rents are significantly below market rates, the property is well insulated from economic downturn. Even with significant rent increases within the first years of ownership, Hunt Club’s rents will remain below market rates through year three. One of Polaris’ primary underwriting criteria has always been a target property's ability to withstand unusually high vacancy over a prolonged period with continued expense increases over time. Additionally, Polaris obtains fixed rate debt, or variable rate debt with a cap on the amount the interest rate can increase. Applying this pressure test to Hunt Club, the property can withstand a vacancy of 15% for five years without experiencing negative cash flow after payment of all expenses and mortgage payments."

"Polaris will be using the same management company for Hunt Club as it does for its other three Austin assets, all of which have exceeded Polaris’ financial projections. Furthermore, Polaris’ Director of Asset Management is based out of Dallas, giving ownership quick and direct access to the property. Additionally, Polaris holds back substantial cash reserves in the event of unusual physical capital needs arise or distress at the property level. This proved critical during the Pandemic, when a major capital need arose from time to time at PREP's properties while income was down substantially from delayed rent payment."

 

NOTE: All answers provided by the sponsor, Polaris Real Estate Partners, or its representatives.

Offered By

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Assets Under
Management

Currently
$653.6MM 10+ assets
Exited
$179.94MM 10+ assets
Portfolio LTV
47.6%  
Historical
Realized Returns

Total IRR
17.3%  
Equity Multiple
2.5x  
Annual Cash
30.8%  
Years Of
Experience

As Principals
30+ years  
In Business
8 years  
Size
8 Staff  
* All information is reported by Polaris Real Estate Partners as of 7/13/2022.
Assets Under
Management

Currently
$653.6MM 10+ assets
Exited
$179.94MM 10+ assets
Portfolio LTV
47.6%  
Historical
Returns

Total IRR
17.3%  
Equity Multiple
2.5x  
Annual Cash
30.8%  
Years Of
Experience

As Principals
30+ years  
In Business
8 years  
Size
8 Staff  
* All information is reported by Polaris Real Estate Partners as of 7/13/2022.

Financials

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Offering Financial

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Location Details

Austin, TX

Travis Pacoe, Polaris Real Estate Partners: "Hunt Club, located in suburban North Austin, is in proximity to an exceptional retail and employment base. There are 146K jobs employed by 11.5K businesses within 5 miles of the property. Major firms such as Electronic Arts, eBay, PayPal, and Apple have offices along West Parmer Lane, all of which are within a 10-minute drive of the property. Hunt Club is also within a 10-minute drive of some of Austin’s premiere retail and leisure destinations such as The Domain and The Arboretum."

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Offering Agreement Documents

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