A Los Angeles investor is jumping into the Texas multifamily market as some signs point to a turnaround.
Decron Properties has bought the 334-unit Citizen House Pflugerville, at 19365 Wilke Lane near Austin. The Los Angeles-based buyer paid $77.15 million, or $231,000 per unit, for the apartment complex, which was built last year. The deal is the first of many, according to Decron CEO David Nagel.
The seller LLC shares addresses with Endeavor, one of Austin’s biggest mixed-use and multifamily developers, and Crow Holdings, the Dallas-based developer founded by Harlan Crow.
Decron plans to buy at least 1,000 more units across Austin in the next two years, part of a push for “growing affordable markets with strong job stories,” Nagel said. The strategy is modeled off Decron’s expansion in Phoenix from 2020 to 2022, when it built up a 2,562-unit portfolio of 10 properties. In all, the company owns about 10,000 apartment units in California, Arizona and Washington.
Some of the biggest buyers during the pandemic buildup favored aging properties where they could take on loads of acquisition debt, renovate the units and hike rents. Decron, however, is targeting recently built apartments.
The garden-style apartments are one- and two-bedrooms. Pflugerville has become a locus for technology workers, as it is near offices for companies including Dell, Apple and Oracle.
Austin’s multifamily market has been on a wild roller-coaster ride in recent years. During much of the pandemic, apartments traded at huge premiums as rents rose at among the fastest rates in the country. Similarly, investors poured cash previously used for office developments into Austin multifamily projects.
More recently, though, rents have fallen as all that new supply comes online. That dynamic has thrown some developers into trouble, as they underwrote annual rent growth. As construction debts now come due, many developers in lease-up are looking to exit, sometimes offering well-heeled buyers a chance at a discount.
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