In December 2016, we invested roughly $7 million in the construction of Estraya Westover Hills, a 278-unit apartment community in San Antonio, Texas. We’re pleased to report that construction was completed in late 2018. As you can see from the photos, the finished product turned out great, with high-end finishes and community amenities, including a resort-style pool.
The quality of the project is apparent in the strong leasing progress to date. As of April 21, the apartment community was 81% occupied, and the sponsor intends to lease out the remaining units throughout the year.
Located just 12 miles west of downtown San Antonio and near many major employers, we believe the remaining apartments will lease up quickly. Once the property reaches a stable occupancy level, the project's sponsor should be able to secure long-term financing at a lower interest rate and pay back our investment.
For additional photos and information on the project, please see estrayawestoverhills.com
Investor FAQ: How does an individual project impact your portfolio?
This investment was structured like debt, where the borrower must pay us a fixed rate of return before they can earn a return for themselves, and their equity provides us with a cushion against losses.
While the sponsor leases out the remaining units, our investment will continue to earn an annualized return of roughly 10%, which supports dividends for the Heartland eREIT. At the same time, the successful completion of construction significantly reduces the overall risk of the project.
