This article has been updated.
A partnership of Ares Management, a Los Angeles-based investment firm, and Duncan Hillsley Capital, a private real estate investment company in Boca Raton, Fla., has purchased the 14-story Vistana building, the art deco structure that started the downtown-area apartment boom when it opened 10 years ago.
The sale between the local group Vistana, Ltd., and a subsidiary of Ares closed on Tuesday, according a letter to residents.
“We are pleased to advise you that, effective today, Vistana, Ltd. has been sold to 100 Santa Rosa, LLC and Greystart Management Services, L.P. will now manage your community,” the letter, signed “The Vistana Team,” reads.
Ed Cross, who manages the San Antonio-based investment group that built the Vistana, confirmed the sale via text, but has not granted an interview request.
In an interview in May, Cross said the Vistana has been profitable for the group, which also includes developer David Adelman.
“We’re making good money on (the Vistana),” Cross said. “There comes a point when (partners) are saying, ‘Ed, it’s been a good run, it’s time to move on.’ ”
The sales price is unknown, as is Vistana Ltd.’s profit from the venture and the cost to build the Vistana, which received an incentive package from the city worth an estimated $4.8 million.
Via email, an Ares spokesman declined to give details of the sale, but said the firm was attracted to the Vistana because of the growth of west downtown, “from the newly-opened Frost Tower, to the pending expansion of the (University of Texas at San Antonio) campus and the reopening of the Alameda Theater.”
The spokesman also said the Ares-Duncan Hillsley Capital partnership plans to reinvigorate the Vistana “with improvements to every aspect of the property so that it can be a catalyst to the future fabric of this neighborhood.”
When the Vistana opened in 2009, it added nearly 250 market-rate apartments on 1.3 acres of land on the southeast corner of West Houston Street and North Santa Rosa Ave., kitty-corner from Market Square. The same year, Julían Castro became mayor and soon kicked off his strategy to add more housing to the downtown area.
The housing that followed was largely completed on downtown’s outskirts, and the Vistana stood alone as a project of its scale in the core. Lately, however, the growth has come more inward. Apartment projects like Encore SoFlo on the 300 block of South Flores Street, and the neighboring apartment project under construction along Dwyer Avenue are both examples of the development entering downtown’s center.
All around the Vistana, construction has been a flurry—the newly-built Frost Tower, the San Pedro Creek revamping, the Alameda Theater renovation—with much, much more to come with the University of Texas at San Antonio’s expansion plans, and Weston Urban’s strategy to build housing on the dozen or so parcels it owns in the vicinity.
The Vistana was built three years before the city launched the Center City Housing Incentive Policy (CCHIP), a program designed to grant incentives in the form of tax rebates and fee waivers in a predictable and transparent way.
Before CCHIP, the city of San Antonio tailored incentive packages to each development.
From 2009 to 2018, the Vistana had its city property taxes abated—a savings of $2.3 million, according to Alejandra Lopez, interim director of the city’s Economic Development Department. The project also received a Chapter 380 loan worth $1.8 million, and an estimated $666,300 in SAWS and city fee waivers, according to the Center City Development and Operations department.
The land and building was valued this year at roughly $51.6 million by the Bexar Appraisal District.
“Fifteen years ago, when I first started thinking about this, I really had no idea of how it would play out,” Cross said when asked about the sentiment he expressed in 2008, when he described the Vistana as a legacy project, meaning one he’d hold for many years.
In interviews 10 years ago, Cross said the Vistana started as a parking garage development, an idea he had based on a study at the time that said there was a parking shortage in the west downtown area. He then added some retail spaces, some apartments on top, and the project transformed into one of the largest buildings downtown.
“If I knew when I started this what I know now, I would have done not as much retail space, and probably would not have built as big a garage,” Cross said.
Four months ago, Cross said the Vistana was 92 percent leased.
Setting It Straight: This article first stated that the 10-year tax abatement for the Vistana ends this year. It ended in 2018.
Clarification: This report first named Ares Management was the sole buyer of the Vistana. Ares partnered with Duncan Hillsley Capital on the purchase.