Q10 KDH Principal Gary Hough and Vice President Matt Franke provided permanent fixed rate financing with our correspondent lender for a multifamily property located in the Greater Houston Area. The transaction closed with a 10 year term and a 4.04% interest rate for a loan amount of $10,750,000. This property was a refinance of a property KDH financed 10 years ago with another correspondent insurance company.
After taking this loan request to the market, our correspondent lender ultimately offered the best overall terms that most closely aligned with the borrower’s objectives. The loan process was very smooth and resulted in a closing only 33 days from application execution.
The refinance resulted in a 200 basis point reduction in the coupon rate while providing the sponsor with a very significant “cash-out”. KDH has enjoyed a relationship with this borrower for over 20 years.
The team of Q10 KDH Vice President Larry Peters and Senior Associate Adam Unger provided a fixed rate life company loan from our correspondent RiverSource for an apartment community in Houston, TX.
The 10 year, fixed rate loan had a 4.0% interest rate that was locked at application, providing the borrower peace of mind during the recent interest rate market volatility. “Life companies are very competitive with Fannie Mae and Freddie Mac on lower leveraged loans such as these. These agencies could not come close to the low interest rate, provide an early rate lock, or match the low closing costs and minimal servicing requirements of the life company lender.”- Adam Unger
Q10 KDH Vice President, Melissa Mayer provided fixed rate financing for Learning Experience in southwest Houston, TX. The loan provided the KDH client with $2,640,000 in acquisition financing at a rate of 4.5%. The transaction closed with a 10 year term and 25 years of amortization.
The end of the first quarter of 2018 is quickly approaching. Over the last few months we have seen interest rates continue to climb and are projected to go up through the second quarter based on reports from top economic forecasters.
During this week’s FOMC meeting, the first under new Chairman Jerome Powell, the Fed increased the benchmark index by 25 basis points and signaled the necessity to steepen the path of future increases.
We predict the Fed to hike the Fed Funds Rate two to three more times in 2018. We also see yield curves flattening further in 2018. Both of these are consistent with market indicators. With a perfect storm of factors (heavy T-bill issuance, the U.S. tax overhaul, and the Fed’s policy tightening), we anticipate that short-term rates will eclipse 2.25% by year-end and 1-month LIBOR will likely approach 2.5% by this time next year based upon the Forward Curve.
HOW Q10 KDH CAN HELP: Q10 KDH clients are locking rates on longer fixed rate products for immediate funding and forward commitments up to 12 months. Please contact our team to review current or future investments.
Q10 KDH Vice President, Ryan Watson provided acquisition financing for Fort Bend Center in Sugarland, Texas for the Dhanani Private Equity Group. The property is a Kroger anchored retail center that covers over 42,000 SF of space. The CMBS Lender achieved a loan for 75% of the purchase price and 30 year amortization on a non-recourse basis. The loan closed at a 5.05% rate with 10 years fixed rate financing.
“The Dhanani Private Investor Group was able to see the long-term value in the center given the expansion occurring in the city of Sugar Land, Texas. Many of the tenants have been in the center for over a decade and have realized the growth of the area. Q10 KDH was able to provide the acquisition financing needed for the project and execute a smooth closing processes with a CMBS lender with no surprises.” – Ryan Watson
Q10 KDH Vice President, Larry Peters arranged Fannie Mae DUS financing for a multifamily property located in Houston, Texas.
The financing provided our client two years of interest only and a floating rate with flexible prepayment. The asset received a seven year term and a low interest rate in the mid 3% range.
“The asset was located outside the Houston MSA and many lenders were more conservative due to the location. Our job is to educate the lender and show them the value of looking at the opportunity from a perspective that others don’t. We were able to accomplish the borrower’s wishes by delivering a higher LTV than what the majority of the market was comfortable in quoting but maintain the aggressive pricing that is available for multifamily assets in the market today.” – Larry Peters
We are pleased to provide you with the Q10 KDH 2017 year end Texas Market Update. Our research covers the four major Texas metro areas including Houston, Austin, Dallas/Fort Worth, and San Antonio.
In this report, you will find an overview of the Texas market comparing year end 2016 & 2017 along with the analytical research to summarize the information.
Year End 2017 Texas Market Overview
Ray Driver, Matt Franke & Adam Unger of Q10 KDH arranged financing for Boardwalk at Towne Lake. Boardwalk is a class A mixed use property located in the northwest region of Houston, TX.
Long term fixed rate financing was provided by Q10 KDH correspondent lender, Thrivent Financial. The asset spans over 124,800 square feet for retail, restaurant, and office use.
“KDH has a long relationship with Caldwell Companies, and we’ve witnessed their Towne Lake master planned development blossom since the project’s initial inception. The financing assignment was very specific, and we surveyed a broad spectrum of prospective lenders including banks, private lenders, debt funds and life insurance companies. Working with the borrower, we filtered numerous competitive loan proposals and ultimately selected our correspondent lender, Thrivent Financial, based upon their combination of rate, loan term, and prepayment flexibility. Caldwell secured an early rate lock when the application was signed, and together we processed the loan as a team. Our borrower benefits from a long term fixed rate loan and Thrivent is comfortably secured by the regions’ premier mixed use development.” – Matt Franke
The Q10 KDH team will be attending the Mortgage Bankers Association’s (MBA) CREF18 convention Feb.10-13 in San Diego. We will be meeting with dozens of capital providers who continue to have a strong interest in the Texas markets.
Based on reports from top economic forecasters, interest rates are on the rise as we have already seen a considerable increase in treasury rates in the last 60 days. A recent study by JP Morgan Chase estimated that the Fed will increase rates four times in 2018. Q10 KDH clients are locking rates on longer fixed rate products for immediate funding and forward commitments up to 12 months. Please contact any of our production officers to review current or future investments.
Cash-out refinancing for a self-storage property in north Houston was provided by Q10 KDH Vice President, Larry Peters. The asset contains 155 units located on just over an acre of land.
Larry Peters arranged the financing for his repeat client through a local Texas bank. The loan provided cash-out refinancing with a five year term and a low interest rate in the mid 3% range.
“The repeat borrower for this transaction has a relationship with KDH spanning over 20 years. We were able to establish a new lender relationship for the borrower that provided a more advantageous term and rate than what they could have secured on their own. At the end of the day it opened new doors between the parties and our borrower was able to receive a highly competitive deal by being open to the opportunity.” – Larry Peters