Cove Capital Investments has expanded its local portfolio, acquiring a five-story apartment complex just west of downtown San Antonio.
The California-based firm, led by founding partners Dwight Kay and Chay Lapin, acquired the Peanut Factory Lofts, a 102-unit apartment complex at 939 South Frio Street in the Central City neighborhood, the San Antonio Business Journal reported.
The transaction, which closed last month, was an all-cash deal, according to a news release. The price wasn’t disclosed; the Bexar Appraisal District assessed the value of the property’s four parcels, including a parking garage, at $16.9 million.
Cove Capital plans to raise $18.6 million from investors to support the acquisition, and so far, the company has secured $2.7 million from 15 investors, according to a filing with the Securities and Exchange Commission.
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The deal will introduce improved management of the property, which is 93 percent leased, Lapis said. The firm plans swift attention to maintenance that was delayed by the previous owner, who had been under pressure to sell the asset.
Windmill Investments bought it in 2016 from Mission Development Group, which had converted it from industrial to residential two years before.
The seller was facing an upcoming loan deadline, Lapin told the outlet.
“We were in negotiations at the end of last year on the asset, and we knew that he had that loan coming. He needed to get an accepted contract so that he didn’t have to really fire sell the asset, and he didn’t have to get into a foreclosure situation or receivership situation,” he said. San Antonio’s multifamily market is facing significant challenges. Construction starts plummeted to a 14-year low earlier this year due to weakened demand and high interest rates, and rental rates and occupancy have declined, leading landlords to offer concessions. The multifamily investment market has been sluggish, with looming maturities driving most sales
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