TerraCap buys Pflugerville resi portfolio with $111M loan

Financing allows multifamily investor to scoop up 608 units across two projects

Commercial investor TerraCap has acquired financing from ACRE to buy two multifamily properties in Pflugerville, one of the fastest-growing suburbs of Austin.

The acquisition was financed in part with two loans totaling $111 million. ACRE is a private equity firm focused on commercial real estate. Its portfolio is mainly tied up in American multifamily properties, but it also invests in the United Kingdom and Asia. In July 2021, the firm announced it had raised $350 million for its first debt vehicle. This investment comes from that fund.

The financing comes even as lending markets have slowed down amid higher interest rates and slowing rent growth in the Sun Belt.

“We’ve found this to be one of the best times to seek opportunity amidst the dislocation, which has allowed us to deploy capital at lower leverage with higher unlevered yields,” said Lauren Villano, an acquisitions and originations executive at ACRE.

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Villano said the firm is particularly bullish on the suburbs to the north and northeast of downtown Austin, including Round Rock, Leander and Georgetown.

TerraCap’s acquisitions are rentals and were developed by Trez Capital and Thompson Realty Capital. The smaller of the two, called the Beacon at Pfluger Farm, contains 258 units and is located at 1300 Rauscher Drive. It was completed last year.

The other property, called the Dalton, sits at 2209 West Pflugerville Parkway and contains 350 apartments. It was built in 2021.

TerraCap specializes in value-add commercial acquisitions in the Sun Belt and west, areas that have received significant attention from multifamily investors in recent years.

Matthew Williams and Kyle Schlitt of Newmark arranged the debt for the deal.

Pflugerville, like other suburbs of Austin, has exploded as the city swells out from its urban core. The town’s population grew 44 percent in the last decade, and is the home of Elon Musk’s Boring Company. Banyan Residential recently announced plans to build a 230-home rental community in the town.