Praxis Newsletter – July 2011
The stars have aligned for our Walnut Grove opportunity in Austin, TX.
In February, Praxis purchased the 54 unit Walnut Grove apartment complex in Austin, Texas.
The investment is outperforming all of our projections, even at this early stage. Because we were able to obtain a larger loan than initially forecast, we were able to close with less equity than originally projected.
The investment closed to new investors in June after we met our equity requirements with just under $550,000 raised. The property has appraised for over $1 million more than our total investment, including purchase and remodeling costs.
Additionally, our construction bids came in under budget.
Interior renovations, which are currently running under budget, are 40% complete. The units are showing so well that several tenants have elected to vacate their existing apartments and move to newly renovated units at a higher rental rate.
The new exterior siding and wood replacement is 50% complete, and the new roofs are also in progress. We expect the bulk of the exterior renovation to be complete in approximately two months.
We are also outperforming our projections on occupancy and rental rates.
Walnut Grove was at 66% occupancy when we acquired it. Our original forecast projected that we would be 90% occupied by 2012 with rents 4% under market and an additional 4% for concessions, giving us 18% economic vacancy.
As of this writing, we are 78% occupied and we have six pending leases, making us 89% leased. Those six new tenants will be residing at the property by July 1st. Consequently, we are five months ahead of schedule on our occupancy forecast.
At this time, we are also exceeding our rent projections.
We expected that by 2012 we would be able to lease units at the “market rent,” which was about $50 to $75 higher than units were renting for at the time of acquisition.
Instead, we have been able to lease at “market rent” immediately, and last month we raised the market rents by $35. We are planning another $25 increase once all construction is complete, and we will be about six months ahead of schedule on revenue increases.
We would also like to note that we have outperformed our concession forecast, as well.
Although we forecasted a 4% loss to concessions, we have not given any concessions and the demand for units remains strong. In other good news, we successfully protested the assessed valuation of the property and lowered our property taxes by $16,500 per year, which is 50% under budget.
We are all extremely pleased with the progress we have made with Walnut Grove. This project is performing as a truly excellent investment.