The private equity firm closed May 5 on The Bradford, a 264-apartment community in Buda, according to an announcement. The company plans to upgrade around half of the complex’s units, and tabbed the other half to be more affordable units intended to serve a broader range of tenants.
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"The property is not subject to any government restrictions on rental rates that would require us to price units at a certain percentage of median family income, but with the surrounding 3 miles having an area median income over $110K, even technically 'affordable' properties with 80% of AMI restrictions would be able to charge over $1,800, which is well north of both current and expected rental rates at The Bradford," Mabarak said.
SPI has observed that tenants are willing to sacrifice more contemporary designs in apartments in exchange for more affordable rates, Mabarak said. Additionally, he said, the cost to renovate units has more than doubled in the past three to five years, meaning that the return on investment for renovated units has decreased.
"So, the decision to renovate ultimately becomes more aligned with the budgets and preferences of prospective tenants, which we don't mind," he said.”