The April 2019 issue of the Houston Economy at a Glance courtesy of the Greater Houston Partnership has been released. Highlights of this month’s update include:
The Texas Workforce Commission reported that 72,600 jobs were created in metro Houston in the 12 months ending February 2019, a 2.4% increase.
Domestic oil production reached 12 million barrels per day (mb/d) in March 2019 (an increase of 1.6 mb/d over March 2018) according to the U.S. Energy Information Administration (EIA). The U.S. now leads Russia (11.6 mb/d) and Saudi Arabia (10.1 mb/d) as the world’s top oil producer.
The latest forecast from The Perryman Group states that growth in metro Houston will outpace Texas and the U.S. through 2023. The projected growth will add 600,000 residents, 340,000 jobs, and $100 billion to real gross product.
Building permits for the City of Houston were up 32.1% in February 2019 ($535.2 million) as compared to February 2018 ($405.1 million). Commercial permits increased 66.1% to $361.8 million.
Q10 KDH Vice President Matt Franke and Associate Michael Borden arranged debt for the acquisition of a single-tenant medical office near Atlanta, GA. The property featured over 8,000 SF of leasable space and was built in 2018.
“KDH was pleased to provide acquisition financing for a New York-based family partnership which facilitated their purchase of a newly constructed Class A medical office building,” Matt said. “The borrower was seeking traditional life insurance company underwriting, which in this case included a 10-year, fixed-rate of approximately 4.60% and a 25-year amortization. We selected Symetra, which is a correspondent lender for KDH, due to their competitive interest rate and low closing costs.”
Q10 KDH Vice President Ryan Watson secured a
$28,000,000 construction loan for Dhanani Private Equity Group. The loan was
secured with a regional bank and has 3 years of interest only payments with
decreasing levels of recourse to the Sponsor. Dhanani Private Equity Group is
constructing a 288-unit, class-A, multifamily project on the west side of
Houston, TX. The property’s name will be The Territory at Greenhouse and will
have full amenities for new residents, including a resort-style pool, fitness
center, business center, and dog park.
“The Sponsor is a well-known retail and hotel developer in Houston and was
able to secure the land a few years ago,” Ryan said. “Given
their development experience, they were able to assemble an outstanding team to
design and construct the project. We feel that new community will be accretive
to the area and offer a level of amenities that no other community in the area
Q10 KDH Vice President Ryan Watson refinanced a 313-unit multifamily property in southwest Houston for a longstanding KDH client. Ryan was able to get 5 years of interest only payments on the 10-year, non-recourse loan. The $12.4MM loan also included cash-out financing above the borrower’s cost basis.
“The owner has been a client of mine for several years, which enabled me to see the numerous upgrades that he has made to the property,” Ryan said. “I was able to convey this knowledge to the lender and meet the financing needs of the client.”
Q10 KDH Vice President Larry Peters and Senior Associate Adam Unger arranged permanent debt for a 42,000 SF industrial park in Katy, TX. Larry and Adam worked on behalf of the borrow to secure a 10-year, fixed-rate loan. The 100% leased property was built in 2017.
“With the increasing costs of construction, developers are finding it difficult to pay off construction debt and pull equity out of a transaction,” Larry said. “We secured a loan that was able to pay off the construction lender at stabilization and put some of the borrower’s equity back in their pocket. The quality of construction, strength of the rent roll, and strong market fundamentals helped solidify the deal. Our repeat borrower saw the value of working with an experienced KDH debt team who negotiated a 10-year-term loan with limited recourse and no prepayment penalty.”
Our YE 2018 Texas Market Update has been released. Inside, you will find an overall market outlook, a breakdown of market highlights for Houston, Dallas-Fort Worth, San Antonio, and Austin, as well as graph data.
Feel free to contact us if you have any questions about the
Q10 KDH Vice President Travis Fite arranged a $4 million loan for the acquisition of a 55,000-square foot, single-tenant retail property in Allen, TX. Travis worked on behalf of the borrower to obtain a ten-year, fixed-rate loan with correspondent life insurance company, StanCorp Mortgage Investors.
“We were able to secure a ten-year, fixed-rate loan for the buyer of a single tenant gym property in Allen, Texas,” Travis said. “Our correspondent lender, StanCorp was able to get comfortable with the gym tenant based upon a large number of members at this location, not to mention a positive history with this repeat borrower.”
Q10 KDH Vice President Matt Franke arranged $2.35M in debt for the acquisition of a Starbucks-anchored shopping center in metro Atlanta, GA. The Class A retail property featured over 8,300 SF of leasable space and was built in 2006. Matt secured a 5-year loan with a national bank lender.
“Through a referral from an existing client, we were engaged by our New Jersey-based borrower to provide acquisition financing for this Class A Starbucks-anchored retail center in suburban Atlanta,” Matt said. “As part of their estate planning, the borrower required non-recourse financing with prepayment flexibility. These requirements were met by our national bank lender who also provided a 30-year amortization and total lender closing costs of less than $10K, including the appraisal, Phase I and lender legal. We received multiple financing offers for this high quality property, with many interested lenders attracted to the recently renewed Starbucks lease and the strong neighborhood demographics.”
Q10 KDH Vice President Matt Franke and Associate Michael Borden arranged acquisition financing for a 145,000-square foot industrial/manufacturing property located in Columbus, TX. Matt worked on behalf of the borrower to obtain a 20-year loan from a regional portfolio lender. The 15-acre property included multiple manufacturing and distribution buildings and a separate 7,400 square foot office.
“We were able to obtain financing for this sale-leaseback transaction for our repeat borrower, despite the subject’s tertiary location in Columbus, TX,” Matt said. “The property is ideally positioned for the tenant at a central location, allowing access to their San Antonio, Austin and West Texas customers, while also benefiting from its proximity to their Houston headquarters. For our borrower, non-recourse fixed-rate financing was their primary objective, and we were able to leverage an existing bank relationship to provide the needed financing. In a rising interest environment, the fixed-rate loan locks in the borrower’s returns during their projected hold period.”
The team of Larry Peters and Adam Unger of Q10 KDH had a busy 2018, with 2019 off to a similar start and expected to be a solid year as well. Various property types and numerous capital sources were accessed using Q10KDH’s national platform and long-term lender relationships.
The transaction below highlights one of the more challenging requests of 2018 when considering the cumulative borrower demands, but an example of KDH’s ability.
Team closes $5M user industrial acquisition loan Unique transaction needs met with help from Q10 KDH
Q10 KDH Vice President Larry Peters and Senior Associate Adam Unger arranged $5 million for the acquisition of a 75,000 SF industrial property in west Houston. The Class A warehouse includes 2,000 SF of office space. Peters and Unger worked on behalf of the borrower to identify a capital source that could meet all of the borrower’s requirements. The transaction closed with a ten-year term, fixed rate loan with a regional bank.
“Traditionally our firm is thought of as a life company correspondent when investor real estate is desired to be financed,” Peters said. “What made this situation a challenge was the combined demands of the borrower. First, the owner was a user and entity, with no individual as the sponsor. A high percentage of the purchase price (85%) was requested along with a long-term loan (10 years), a fixed rate, no guarantee of the debt, and with no lender fee.”
Q10 KDH is a founding member of Q10 Capital, LLC. In 2018, the Q10 Capital members cumulatively closed loans with 113 different capital sources.
“Our knowledge of working with numerous national and local debt sources proved to be the difference of successfully meeting all sponsor needs or just a few. A debt source was secured who saw past the typical underwriting ratios and lending parameters. They understood the value of starting a relationship with the borrower and continuing a relationship with KDH,” Peters said.
The borrower was referred to Peters through a mutual client who has also worked with Q10 KDH on past transactions. Peters said that he considers referrals to be the greatest honor and a mark of trust, both professionally and personally.
“KDH’s market knowledge and experience to secure the lender able to meet every request was the difference between success and failure,” Peters said. “I believe that relationships still count.”