Palladius Capital Management Purchases Austin Property

Citizen House Kyle was developed by Endeavor Real Estate Group as part of its 65-acre Dry River District.

Citizen House Kyle in Kyle, Texas. Image courtesy of Palladius Capital Management

Palladius Capital Management has acquired Citizen House Kyle, a newly built, 342-unit, Class A multifamily property in Kyle, Texas, a growing suburb south of Austin, Texas, from developer Endeavor Real Estate Group.

The sale price of the property, located in Dry River District, a 65-acre mixed-use community being developed by Endeavor, was not disclosed.

Located at 3400 Kyle Crossing, Citizen House Kyle was completed earlier this year. G. Nelson Crowe III, principal at Endeavor Real Estate Group, said in a prepared statement the multifamily asset is an integral part of Dry River District. The development, located along the Interstate 35 Innovation Corridor, will include multifamily, medical, hotel and retail space totaling more than 300,000 square feet. Crowe said the Palladius team worked with Endeavor through a challenging debt market to close the deal.

Nitin Chexal, CEO of Austin-based Palladius, said in prepared remarks the transaction was a win-win scenario for both firms. He said Endeavor was able to efficiently monetize its investment in a pre-stabilized property and Palladius acquired a high-end apartment community in a market experiencing rapid population growth. Kyle, located in Hays County, has seen its population increase more than 85 percent since 2010. Hays County is ranked as the second fastest-growing large county in the country, according to U.S. Census Bureau data.

Chexal and Director of Investments Nick Maupin, who led the Citizen House Kyle transaction, and the rest of the Palladius team have experience investing along the I-35 Innovation Corridor. They have deployed more than $350 million across value-add and core-plus rental housing in the region since 2014. Chexal said Palladius plans to expand its strategy of leasing up pre-stabilized Class A multifamily assets and is seeking to establish similar partnerships with other merchant builders in its target markets.

Property details

Citizen House Kyle features luxury one- and two-bedroom units ranging from 800 to 1,250 square feet. Amenities include a resort-style pool, resident clubhouse, fitness center, outdoor lounge and coworking space.

The property is located 15 minutes from Austin’s Central Business District and 15 minutes from San Marcos, Texas, which are both major employment centers with companies including Amazon, Tesla, Seton Medical, HBO, Best Buy and H-E-B. Citizen House Kyle is within walking distance of the Dry River District retail offerings, including Home Depot, Starbucks and a variety of dining options. Evo Entertainment, a 75,000-square-foot entertainment center, is also nearby and features 11 movie screens, a 14-lane bowling alley and an arcade. Costco is under construction.

Palladius investments

In April, Palladius acquired The Heights, a 672-bed student housing community in San Marcos from Capital Square. The price was not disclosed but Blackstone Group Debt Funds provided $21.3 million to finance the purchase, according to Yardi Matrix data. Completed in 2005, the property is located within 2.5 miles of Texas State University.

Palladius announced Monday that it was seeking $300 million in commercial real estate debt investments. The real estate manager, which focuses on multifamily, student housing, hospitality and select thematic investment strategies, currently manages and operates $500 million of real estate across the United States. With this latest investment strategy, Palladius will be targeting construction and transitional commercial real estate debt investments, which it plans to hold on its balance sheet, including first mortgages, B-notes, mezzanine debt and preferred equity.

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