Texas’ big cities typically get most of the attention in the Lone Star State’s latest multifamily development boom. But College Station is also getting some love from investors because it’s home to Texas A&M University, the state’s largest university.
San Antonio’s Koontz Corporation sold Encino Trace Luxury Apartment Homes to California-based SB Pacific Group in late July, seven months after its completion.
Asked why Koontz is selling the property so soon, president and CEO Bart Koontz told The Real Deal, that it’s par for the company’s course.
The Encino Trace Lobby
at 2338 Harvey Mitchell Parkway South
“The timing of our exit is consistent with our business model as a merchant builder,” Koontz said. “We are developers, not operators. Once a project reaches stabilized occupancy and cash flow, assuming favorable market conditions, we sell. It’s the culmination of our development process.”
Currently, Encino Trace is 97 percent leased and the average monthly rental rate is $1,341 — amounting to $1.51 per square foot, Koontz added.
The property’s market value sits at $32 million, according to Brazos County Central Appraisal District records, but Koontz declined to disclose the actual sale price.
He did suggest, however, that SB Group might have targeted the apartment to take advantage of 1031 exchange rules, which allow investors to defer capital gains taxes from the sale of an investment property by purchasing a similarly priced investment property. Lucas Fertitta, SB Pacific Group’s director of acquisitions did not return TRD’s request for comment on the purchase.
The 302,292 square foot, 14 building, 340-unit class A multifamily development sits on 17 acres at 2338 Harvey Mitchell Parkway South in suburban College Station. Encino Trace is part of a trend of luxury multifamily and student-focused apartments sprouting up around the once sleepy college town.
“I think it’s a different market now,” Koontz said. “There are a lot of young graduates sticking around to work at some of the new companies that have been launched here and other companies that have set up operations in the area.”
Students are also attracted to the luxury developments being built in the College Station area — but with roommates.
“Students and recent graduates were the bulk of our tenants, you’d have three or four renting an apartment home,” Koontz said.
The region also has the potential to be transformed even more if ground ever breaks on the high-speed Texas Central Railway, which includes a stop in College Station.
After completing the sale of Encino Trace, Koontz, which focuses on commercial and multifamily property development in Texas, will turn its attention to developing the Moderno Apartment Homes in the San Antonio bedroom community of New Braunfels, along with Fiesta Trails, a 10-acre multifamily development, and Westport Industrial Park, a 35-acre industrial project, both of which are in San Antonio.
Koontz started his eponymously named real estate development company in 1997 with Red McCombs, a San Antonio-based billionaire who made his fortune in car dealerships. McCombs also co-founded the company that eventually became media behemoth iHeartMedia and formerly owned the NBA’s San Antonio Spurs and Denver Nuggets and the NFL’s Minnesota Vikings.
Back then, the Koontz Corporation was known as Koontz McCombs. In 2014, McCombs sold his interest to the company’s management team for an undisclosed amount, to free up money to potentially invest in a bid to attract the NFL’s Oakland Raiders to the Alamo City, according to a San Antonio Business Journal report.
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