AUSTIN, TX – PEG Companies [PEG], a leading commercial real estate investment firm known for its unique approach to value creation, has acquired its 14th extended stay hotel for conversion into high quality Class B apartments. Habitat Suites Austin complements PEG Companies' growing portfolio of apartments-converted hotels across the country.
The hotel is ideally located on 500 E Highland Mall Boulevard and is currently under renovation. It stays on track for a delivery in early summer. PEG is in the process of adding a fitness center, workspaces, cosmetic enhancements, and other updates needed to convert the property into a market-leading multi-family community while renting a building with furnished units as-is.
The acquisition of Habitat Suites is the latest of many extended stay acquisitions for PEG. The company is currently raising a $ 150 million fund, the PEG Extended Stay Conversion Fund [L.P.], specifically dedicated to the strategy of converting discounted long-stay hotels into high-quality, Class B apartments in strong US markets. This Austin location marks the third acquisition within the new fund, following in the footsteps of an earlier fund that includes 11 long-stay hotel acquisitions.
When the hospitality industry experienced the severe strain from the effects of COVID-19 last year, property groups across the country saw the value of PEG's long-stay conversion strategy and followed suit. When asked how this increased focus from other groups could affect PEG's strategy, Cameron Gunter, PEG's Chief Executive Officer said:
"We are seeing more groups out there citing for the older extended-stay hotels. We are finding that since these other groups are new to the game, they don't think about the implications of certain purchases. We've been around since 2018. and we are very picky about the hotels we purchase. We are confident that by disciplining our approach we will build a strong portfolio of B-Class apartment blocks across the country and continue to excel as leaders in this space. "
When considering potential acquisitions, PEG has several criteria on its list, including urban and suburban submarket locations with heavy leasing, continued forecast growth metrics in the region, and recent sales of comparable Class B apartment blocks. The population within five kilometers of Habitat Suites and the adjacent Highland Mall is expected to grow 10.33 percent over the next five years. In addition, the Austin Community continues to make progress in redeveloping the 1.3 square foot mall at Austin Community College. 800,000 square meters of office space; 150,000 square meters of retail space; new outdoor trails; several new parks; and 1,200 class A apartments.
PEG Investment executives say the new use after converting to an apartment building will help meet the growing demand for accessible housing in the Austin area.
"Like so many communities across the country, Austin is in dire need of affordable, working-class housing," said Soren Halladay, PEG's chief investment officer. "We're excited to give this property a little love and care to transform it better than before, while providing people with an inviting, stylish place to call 'home'."
