AvalonBay to Pay $619M for 8 Texas Assets

AvalonBay Communities has entered two separate contracts to purchase a total of eight assets in Dallas-Fort Worth and Greater Austin, Texas, from entities affiliated with BSR Real Estate Investment Trust. The properties encompassing 2,701 units will change hands for a combined $618.5 million.

This transaction will double AvalonBay’s Texas Expansion Regions portfolio at a time when assets may be purchased at a compelling basis compared to today’s construction costs, CIO Matthew Birenbaum said in prepared statements.

The largest of the deals includes the acquisition of six Metroplex properties—comprising 1,844 units—for an aggregate price of $431.5 million, of which $193 million is to be paid in cash. BSR REIT and BSR Trust, as well as certain holders of BSR Trust’s Class B units, are under contract to sell. The transaction is expected to close in the second quarter.

---

READ ALSO: Will Multifamily Thrive in ’25?

---

The metro Austin all-cash acquisition will close earlier, at the end of March. It involves two assets totaling 857 units, which are on track to sell for a combined $187 million. The seller is BSR Trust.

The average apartment sale price is slated to reach $229,000 across the eight assets. Projections place the weighted average initial market cap rate in the high 4 percent ballpark.

The communities came online between 1995 and 2021, with a weighted average debut in 2014. The collection includes:

• Cielo, 3499 Ranch Road 620 S., Austin, 554 units
• Retreat at Wolf Ranch, 2323 Wolf Ranch Parkway, Georgetown, Texas, 303 units
• Auberry at Twin Creeks, 705 Bray Central Drive, Allen, Texas, 216 units
• Satori Frisco, 11900 Research Road, Frisco, Texas, 330 units
• Vale Frisco, 12050 Research Road, Frisco, 349 units
• Aura Benbrook, 301 Mercedes St., Benbrook, Texas, 301 units
• Lakeway Castle Hills, 1980 E. State Highway 121, Lewisville, Texas, 276 units
• Wimberly, 4141 Horizon North Parkway, Dallas, 372 units

BSR’s side of the deal

Through these transactions, BSR will achieve a value lift of roughly $111 million compared to the assets’ original acquisition price, CEO Dan Oberste said in prepared remarks. The REIT plans to redeploy the proceeds into its core Texas Triangle investment markets.

---

READ ALSO: Up Next? Stay in the Mix Till ’26

---

In exchange for the cancellation of up to 15 million Class B units of BSR Trust tied to the Dallas-Fort Worth sale, the participation holders will be issued up to $238.5 million in equity from AVB DownREIT, a newly formed AvalonBay subsidiary partnership entity.  

BSR will also retain about $109 million in secured Fannie Mae debt—encumbering the metro Austin properties—at an interest rate of approximately 2.7 percent, which the company intends to use to secure substitute communities. A total of $48.4 million will be used to repay existing debt on the contributing properties.

AvalonBay’s commitment to multifamily grows

AvalonBay’s current contractual commitments are slated to overtake the company’s entire 2024 acquisition activity, which clocked in at $460.1 million. Last year, the firm purchased six communities encompassing 1,441 units and 1,700 square feet of commercial space.

One such asset was Pine Prairie Apartments, which got rebranded to Avalon at Pier 121 post-trade. AvalonBay acquired the 300-unit property in Lewisville, Texas, from LivCor.