Corpus Christi, Texas—Castle Lanterra Properties has acquired Springs at Corpus Christi, a 284-unit multifamily community on the city’s prominent south side. The property is the second Castle Lanterra has acquired in Corpus Christi, and its sixth in the Lone Star State.
Springs at Corpus Christi is a two-year-old, Class A, best-in-class apartment community and boasts a stabilized occupancy. The acquisition represents an expansion of Castle Lanterra’s traditional value-add strategy aimed at upgrading and repositioning underperforming properties. “We already have a presence in Corpus Christi and understand the market,” Castle Lanterra CEO Elie Rieder told MHN.
“This is new construction that was built in 2014 with well-designed floor plans and high-end modern finishes such as granite countertops. It is also well-located near major employers in the area such as the Christus Spohn Health System, the Naval Air Station, Texas A&M University and the Port of Corpus Christi.”
Castle Lanterra plans to maintain the asset as a long-term hold offering stable cash flow. Due to favorable debt characteristics, the firm may be able to achieve cash-on-cash yields of 10 percent or higher from the start, Rieder added.
The asset benefits from limited capital needs in a stable and growing market, added Castle Lanterra Managing Director Austin Alexander. “Perhaps the biggest downside is that there has been substantial new construction in the area, with a newly built property currently in lease-up right next door,” he said.
“This has created some headwinds to rent growth, but going forward, construction plans are limited and we expect upside potential once the new construction pipeline drops off.”
Another benefit for Suffern, N.Y.-based Castle Lanterra in this transaction was the assumption of a long-term fixed-rate Fannie Mae loan. “Because of our strong track record with Fannie Mae and experience with loan assumptions, we were able to offer the seller a rapid assumption approval and strong certainty closing,” Alexander said.
“This also eliminated interest rate risk from the deal, which was especially helpful given the recent sharp rise in rates. If we did not already have the interest rate locked on the deal, it would have been difficult to make the numbers work in the face of such a big move in treasury rates in November.”
Springs at Corpus Christi features 17 distinct studio, one-, two- and three-bedroom floor plans. Apartment homes average 973 square feet in size. Twenty “Concierge Units” offer updated ceiling fan and lighting kits, stainless steel appliances, and crown molding.
The community provides an assortment of upscale amenities to renters. They include a resort-style swimming pool, 24-hour state-of-the-art fitness center, dog park, complimentary car care, townhouse-style private entries and extensive landscaping.
“CLP is very familiar with the strength of this market, and wanted to diversify our portfolio with one of the city’s top multifamily properties,” Rieder said.