Palladius Snaps Up Another Texas Student Housing Property

The San Antonio-area community is located near the local University of Texas campus.

An outdoor pool with apartments in the background
The Luxx is located near the University of Texas at San Antonio. Image courtesy of Palladius Capital Management

Palladius Capital Management has acquired The Luxx, a 220-unit, 694-bed student housing property near the University of Texas at San Antonio, from Crow Holdings Capital and The Preiss Co. The sellers bought the property in 2019.

The parties to the sale didn’t disclose the price, but Palladius did note that, including this deal, the company has invested over $170 million over the last 12 months in residential properties along the Austin-San Antonio Interstate 35 corridor. Over the last decade, the firm has acquired upwards of $550 million in real estate in the corridor.

Palladius plans to undertake light unit interior renovations at the property, as well as a more comprehensive renovation program at the community’s common areas. Units will receive new stainless-steel appliances and various bathroom improvements. There will also be upgrades to common areas.

The community, which is located at 6023 UTSA Blvd., was developed in 2014 and offers both apartment and townhouse accommodations with in-unit laundry facilities, walk-in closets and granite countertops. Common amenities include a two-story fitness center, business center, clubhouse, volleyball court, swimming pool, spa, private study rooms and 800 parking spaces.

The property was 95 percent occupied at the time of the sale, according to Newmark, which brokered the deal. The university is on a growth trajectory, seeing an 2.1 percent increase in enrollment in spring 2024 compared with a year earlier, to about 32,400 students. The school hopes to raise enrolment figures to 41,000 students by 2028.

Palladius CEO Nitin Chexal said that the company believes in the long-term outlook for student housing, especially public universities in high population growth states like Texas, and in high-growth areas like I-35, which in effect forms a growing megapolis along the axis between Austin and San Antonio.

Strong demand for student housing

Demand for student housing is still robust, but capital market trends, particularly high interest rates, have stymied investment sales recently, according to Yardi Matrix data, which puts the number of student housing properties that traded in 2023 at 73. That is an anemic number compared to the average number of sales in 2021 and 2022, which was 205.

That is despite the fact that preleasing for the fall 2024 school year reached a new record at the end of 2023, hitting 47.3 percent, up from 38.4 percent a year earlier. While the average asking rent per bed continues to climb, rent growth has been slowing since the beginning of the leasing season.

Student housing rents averaged at $858 per bed in December, up 4.9 percent over the previous 12 months, but even so that rate represents a slowing trend from the 6.4 percent rate of rental increases seen earlier in the leasing season.

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