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Monday, March 14, 2011, 4:50 am

Residential Real Estate: Investment firm Praxis buys 54-unit Texas apartment property

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    Also: Hearings set on latest proposals for Napa Pipe project

    Jenna V. LoceffSanta Rosa-based Praxis Capital has acquired a 54-unit apartment complex in Austin, Texas.

    The Walnut Grove Apartments were purchased for an undisclosed price. The property was a recent foreclosure and Praxis was able to get this multifamily complex at a deep discount using an all cash proposal, which closed within seven days of signing the purchase contract.

    Austin’s job growth rate is continuing to outpace that of other major Texas cities. As noted in the Texas Workforce Press Release, January 2011, “The annual job growth rate in Texas has steadily risen every month during the past 12 months.

    “These factors along with many other analytics bring us to the conclusion that growth, economic stability and demographics are creating a timely opportunity for multifamily residences in this area,” said Managing Director Brian Burke.

    Praxis Capital plans to invest over $10,000 per unit renovating and upgrading the property providing a desirable residential alternative in a thriving community.

    “This is a value-add play,” said Mr. Burke. “This is a very well-located asset that was neglected, experienced a foreclosure, and this represents a great opportunity to make this a very desirable property for our residents and investors.” The company plans to acquire 7,500 units in the major Texas metros.

    Praxis Capital, LLC is a real estate private equity investment firm seeking to capitalize on a variety of market cycles to acquire the right assets, in the right markets, at the right time.

    Mr. Burke has over the past 20 years developed computer software that takes seven sources of data from public documents and puts it into a centralized repository. From that data, decisions can be made about which distressed properties to purchase and for how much to give the best rate of return to investors.

    ***

    Napa Pipe’s supplemental Draft Environmental Impact Report was released for comments on Feb. 14 and all comments are due by March 31.

    There will be two public hearings on March 16, one at 9 a.m. and one at 6 p.m. at the Conservation, Development and Planning Commission and the Office of  Education respectively.

    The proposed project would amend the County’s General Plan and zoning ordinance and result in phased construction of a new neighborhood on the 154-acre Napa Pipe site at 1025 Kaiser Road in unincorporated Napa County.

    The new neighborhood would have a combination of residential, neighborhood-serving retail, light industrial/R&D/warehousing and office space as well as a condominium hotel. These uses would be organized around new streets and public open spaces

    Key project features would include:

    • Brownfield recycling: Remediation, grading and site preparation to raise the elevation of a flat, largely paved, 154-acre industrial site
    • Housing: Development of approximately 2,580 units in three phases with varying dwelling unit sizes, heights and building types; 20 percent of the units constructed would be deed restricted as affordable
    • Seniors facility: Construction of a 150-unit Continuing Care Retirement complex with 225 beds that would provide independent living for seniors, with common dining, recreational activities, housekeeping and transportation as well as assisted care for seniors
    • New infrastructure and public open space: New roads, sidewalks and other infrastructure, plus approximately 56 acres of new public parks, open spaces and wetlands, including a new segment of the Napa River trail about 0.8 miles long
    • Community facilities: Development of community facilities encompassing a total of 15,600 square feet, including a transit center, interpretive nature center, boat house, public safety building, café/visitor pavilion and drydock theater

    Particular areas of controversy:

    • Traffic and transportation: The proposed project would result in new vehicle trips to and from the site, which has the potential to impact operations at intersections and along roadway segments within the transportation network.
    • Hydrology and water quality: Some members of the public at the Jan. 29, 2009 scoping meeting expressed concerns regarding flooding, aquifer depletion and water supply. Since publication of the 2009 DEIR, concerns have focused on the potential use of groundwater to support development on the site, as well as the proposal to treat and discharge wastewater on-site, rather than using Napa Sanitation District services.

    In response to these concerns, use of surface water is now being considered and on-site discharges of treated wastewater to the Napa River is no longer proposed.

    ***

    Wells Fargo is forecasting that “exceptionally weak” demand will continue to challenge the housing market.

    While sales of existing homes have risen for three consecutive months, most of the increase appears to be due to a rise in foreclosure sales and distressed transactions. Those gains were amplified by the seasonal adjustment process because the uptick in sales occurred at a normally slow period for home sales. Home prices have continued to slide, with all of the major price indices, including the National Association of Realtors’ data, recording price declines during the second half of 2010,” it reads.

    Foreclosed properties also create a competitive headwind for homebuilders, the report said.

    There is some good news on that front. Most of the forward looking credit indicators, such as early stage delinquency rates, are improving and, with job growth picking up, should continue to improve over the next few years.

    Even without additional supply, the competition from foreclosures is expected to pull the median price of new homes 5.7 percent lower in 2011 as builders construct smaller and more affordable homes, according to the report.

    •••

    Submit items for this column to Jenna V. Loceff at jloceff@busjrnl.com, 707-521-4259 or fax 707-521-5292.

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