January 14, 2015

Historic Aztec Theatre Has New Owner, New Seating, New Retail, New...

After a year of turning San Antonio's historic Aztec Theatre into a modern concert venue, PHH Ventures' Sam Panchevre just purchased the 112k SF mixed-use building. He has more conversions in mind in the building, including bringing out the largest block of Riverwalk frontage the market's seen in nearly two decades.

Kennedy Wilson managing director Suzanne Havekost has been working on the Aztec Theatre since 1998, when Belgian billionaire Baron Theodore Bracht purchased it. The facility had just been added to the National Registry of Historic Places, and the Baron invested $20M into restoration. (The theater roared into life in the Roaring Twenties, installing the largest chandelier in the country on the same day the stock market crashed.) A number of shows and theater groups have failed in the building since, and Suzanne started remarketing the space in December 2012. Pictured: Suzanne between the Baron and Sam in the Aztec Theatre.

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PHH leased the 41k SF theater in 2013 and pumped $2M into redeveloping it. Suzanne tells us Sam was able to fix the problem that had plagued so many of his predecessors: insufficient seating. A couple months ago, he contracted with Live Nation, and it seems the Aztec may finally be on the road to success. Meanwhile, Baron Bracht decided he was ready to exit the San Antonio market (he'd already sold off his other holdings, like the South Texas Building), so Suzanne approached Sam about purchasing it off-market. It took 18 months to close the deal.

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Sam and Suzanne will be working on converting a couple different chunks of the building. The most exciting, Suzanne says, is the 15k SF of retail space on the river. The Aztec Theatre building has traditionally had a bunch of small retailers, but now she envisions one big user. There hasn't been such a big contiguous chunk on the Riverwalk in more than 15 years, she tells us. Since the office market hasn't been strong in the area, the team is also converting 30k SF of upper-level office space into another use, perhaps condos. One thing is staying the same--Iron Cactus expanded its lease long-term.

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The Suburbs Are Attracting Multifamily Investors

Austin's 'burbs may soon be a multifamily mecca, as more people take advantage of the affordable rents, attractive locations and excellent school systems, says BMC Capital VP Hank Crane. He arranged $5.95M in financing for The Meadows (a 100-unit fully occupied multifamily property in Cedar Park), which is across the street from Westwood High School--ranked No. 23 in the nation. ("23 is a prime number!" shouted all of the whip smart, suburb-raised students in unison.) The loan for the $8.625M acquisition features a 69% LTV, five-year fixed-rate at 4% and a 30-year amortization. 

Hank tells us apartment complexes outside Austin are being sold at a premium. The under-market rents appealed to the out-of-state buyer of The Meadows, and the units lend themselves to a value-added investment, Hank tells us. The purchaser plans several phases of capital improvements and will upgrade interior doors and fixtures, reconstruct pathways and waterways, and upgrade patio areas.

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Watch: PWC Predicts Top Markets for Real Estate Investment in '15

Mitch Roschelle, the US real estate advisory practice leader at PwC, sat down with Bloomberg's Pimm Fox to discuss the top US markets for real estate investment in 2015. If you were too busy watching Friends on Netflix, here's a rundown. Roschelle points out that with prime buildings in New York and DC fetching $1k PSF rents or higher, investors are increasingly looking for higher yields and replacement costs. Texas cities driven by oil score high in those categories, especially as their economies diversify.

On the note of diversifying, Mitch says that perennial retiree favorite Phoenix is catching on with Millennials thanks to impressive job growth. "Jobs are chasing people," he says. "Not the other way around." And areas popular with students (e.g. Phoenix and Charlotte) are reeling in employers. Jobs and young residents should revive several markets in 2015 and even boost the fortunes of downtrodden cities. When it comes to the year's biggest comeback kid, Roschelle puts his money on Detroit. Listen to what he has to say here.

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We're looking forward to those 60-degree temps this weekend. Our Snuggie needs to get washed, but we don't want to take it off. tonie@bisnow.com and catie@bisnow.com