It’s been almost five months since we broke ground on our affordable housing, ground-up new construction project in Austin, TX back in October of 2023. To check in on the progress, PPR Chief Investment Officer, Spencer Staples, and I met with our partner on the project to view the development in person earlier this month. I thought everyone would be interested on how that trip went and what advancements we saw while we were there.
If you hadn’t seen my previous interview, please take a look as I mentioned what we liked about the project, which included the tax advantages, a shorter hold period, the location, and the sponsor with whom we’ve partnered.
I also wanted to remind everyone of the project details:
- New construction: Multifamily building with 101 units (studios, 1BR and 2BR units)
- Estimated Construction Period: 16-18 months.
- Project Capitalization: $21.7M ($11.7M in equity)
- Projected IRR to PPR: 23%
The Visit
It was 90 degrees and sunny in the early afternoon as we approached the construction site in the neighborhood of Riverside (just southeast of downtown Austin). We arrived around 2pm with our development partners from Heartwood Real Estate Group, President Chris Affinito and VP of Development, Drew Fineberg to tour the site.
As we walked onto the site, I immediately noticed how much the site grade had been elevated since the first time I visited in the due diligence phase of the project. An elevator shaft loomed in the near distance on top of a recently poured slab, on which the mid-rise apartment building would soon begin to frame out.
Recently poured concrete slab with utilities tied in, elevator shaft in the distance.
Elevator shaft street view for perspective.
As we were on a construction site, each of our group was handed a hard hat and bright vest. Additionally, a representative from Spire – the third-party management company that is contracted to assist with the surveillance and scheduling of the duration of the construction – was on hand to provide insight and assist with any questions we had.
We chatted about the progress so far with Jim Freeman, VP of IE2 Construction, who is managing the build out of this project. He talked to the challenges and achievements the project has endured thus far. Despite some weather setbacks due to unseasonable rain in December, Jim and his team were confident they would be able to stick to the initial delivery schedule of January 2025 for project completion, with framing beginning in the next few weeks. The framing process will likely continue for the next two-and-a-half months, and as the building is built upwards and wrapped in, significant progress can be made to make up time if necessary.
As we continued to walk across the site and notice how the majority of the earthwork was completed, we felt a high level of confidence from what the construction and development teams had accomplished to date. As we made our way to the rear of the site, we finished the tour overlooking the poured retention pond (see below) and we were able to get a better sense of the overall site layout, including where the pool would be placed, the dumpsters for the residents and the on-site parking lot.
Based on the report from the on-site team and our partners, we left the site feeling secure that we are in a good position for an on-time projected deal execution and look forward to the next site visit in a few months. We intend to keep investors up to date on the progress made as the project continues so stay tuned and happy investing!
