In a significant financial move, Geyser Group successfully obtained a $28.5 million construction loan earmarked for their innovative residential project in East Austin, an area grappling with financing instability. This considerable funding will support the development of a 60-unit complex comprised of single-family homes and townhouses, strategically situated at 4908 Lott Avenue next to Springdale Park. Known as Common Ground, this project has been in the works since late 2020, when Geyser acquired the land parcels from David Suissa’s Lorda Corporation. Initially, the company relied on a $3 million loan from Keystone Bank. However, with the new financing secured through WelcomeLend, a tech-driven advisory firm based in Denver, Geyser aims to push this project forward, even as the identity of the lender remains undisclosed.
WelcomeLend has characterized the lender as a “bank alternative,” revealing that this financing option enables higher leverage loans with a 68 percent loan-to-value ratio. The Common Ground project will offer some affordable housing options featuring modern designs, including blocky wood facades, balconies, and yard spaces, all centered around a curving main road. An essential part of Geyser’s strategy has been to upzone the land from six to 12 units per acre to maximize the development’s potential. This move is particularly ambitious given the current economic climate, which has seen a significant reduction in housing starts in Austin. Builders in the area initiated the construction of approximately 3,500 new homes last month, a sharp decline from the housing boom experienced during the pandemic.
Navigating Economic Challenges
The slowdown in housing starts is not an isolated issue but correlates with broader market trends. Since mid-2022, the Federal Reserve’s interest rate hikes have had a palpable impact on the real estate market. Specifically, they have led to a 2 percent decrease in Austin home prices over the past year. This is part of a more substantial 17.5 percent dip in home prices since mid-2022, as reported by Redfin. Despite these challenges, the Geyser Group is pressing ahead, leveraging substantial financing to turn the Common Ground project into a reality. The project’s design and focus on affordability come at a time when residential development is fraught with obstacles due to tightened financial conditions and falling home prices.
By securing the $28.5 million loan, Geyser underscores its commitment to navigating these economic uncertainties and advancing residential development in Austin. The Common Ground project is poised to add valuable housing options in a city experiencing a housing crunch. Geyser’s approach reflects a broader trend among developers who are increasingly looking for innovative financial solutions and leveraging alternative lending sources. The higher leverage loans facilitated by intermediaries like WelcomeLend are becoming more common as traditional bank loans become harder to secure under stringent economic conditions.
The Broader Impact on Austin’s Market
Geyser Group recently secured a $28.5 million construction loan for an ambitious residential project in East Austin, an area facing financial challenges. This substantial funding will facilitate the creation of a 60-unit complex featuring single-family homes and townhouses at 4908 Lott Avenue, adjacent to Springdale Park. Dubbed Common Ground, the development has been in motion since late 2020, following Geyser’s acquisition of land parcels from David Suissa’s Lorda Corporation. Initially, Geyser utilized a $3 million loan from Keystone Bank, but the new financing from WelcomeLend, a tech-driven advisory firm in Denver, aims to advance the project despite the lender’s anonymity.
WelcomeLend describes the lender as a “bank alternative,” noting that this option offers higher leverage with a 68 percent loan-to-value ratio. Common Ground will include affordable housing with modern designs such as blocky wood facades, balconies, and yard spaces, all centered around a winding main road. Geyser’s strategic move to rezone the land from six to 12 units per acre is ambitious amid Austin’s current housing market slump, which saw about 3,500 new homes starting construction last month, a notable drop from the pandemic-era housing boom.
