Stratus Properties Wraps Block 21 Refi
- Jan 14, 2016
By Anca Gagiuc, Associate Editor
Austin, Texas—Stratus Properties Inc. has completed the refinancing of Block 21, the site of W Austin Hotel & Residences. Goldman Sachs Mortgage Company provided the ten-year, $150 million loan with interest fixed at 5.58 percent.
In 2015 Stratus bought out its partner in the project, Canyon-Johnson Urban Fund II, gaining full control of the downtown high-rise, which is also home to the Austin City Limits Live at Moody Theater music venue, as well as to several shops, restaurants, and offices. The price tag on Canyon’s interest was based on a gross price of approximately $210 million. Less the cash and cash equivalents held by the partnership, the transaction’s price was approximately $187.2 million.
The net operating income for the W Austin Property at the time of the sale was $15.6 million, and the property traded at a capitalization rate of 8.3 percent. Post-acquisition, Stratus refinanced the existing Bank of America term loan for the W Austin Property, increasing proceeds from $100 million to $130 million, and received $20 million of bridge financing from Comerica Bank, Stratus’ primary relationship lender.
William Armstrong III, chairman, president & CEO of Stratus, said in a prepared statement, “We are extremely pleased with this new long-term capital structure for this iconic property in downtown Austin. The Goldman Sachs financing eliminates interest rate and recourse risk with respect to our W Austin Property, enabling significant recurring cash flow from a truly premier asset. Although our historical investment of time and resources in this asset has been significant, we believe our hard work and patience has rewarded and will continue to reward our shareholders.”
Approximately $129.9 million of the proceeds from the new term loan were used to repay in full Stratus’ existing obligations under the Bank of America which was terminated effective Jan. 5. Moreover, the $20 million Comerica bridge financing was paid in full effective January 7, 2016 with proceeds from the new term loan.
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