PCCP Recapitalizes Houston’s Historic ‘Star’ with $99M Loan
- Aug 04, 2020
PCCP LLC, a Los Angeles-based real estate finance and investment management firm, has purchased a $99.3 million performing senior loan collateralized by The Star, a historic property in downtown Houston that was transformed from a former office building into a Class A mixed-use property with luxury multifamily housing several years ago.
While PCCP did not disclose details of the transaction, it did note the senior loan was purchased at a “significant discount to par value.” PCCP also entered into a loan mediation agreement with the existing borrower Provident Realty Advisors and “significant new capital was provided.”
Provident, a privately held Dallas-based real estate firm bought the former Texaco building at 1111 Rusk St. in 2013. The firm began an extensive renovation to repurpose the property into The Star, a 16-story, 286-unit property with about 26,440 square feet of retail. When it opened in 2018, the owners also added an adjacent 682-stall parking garage.
In Sept 2017, Provident hired the firm then known as HFF to secure financing for the redevelopment and HFF arranged a $121.6 million floating-rate bridge loan through TPG Real Estate Trust. JLL has since acquired HFF.
Provident President Jay Hawes said in a prepared statement the firm needed to close the transaction in less than two weeks in the midst of the COVID-19 shutdown. He said PCCP moved quickly to provide a creative solution to a complicated transaction.
Ron Bonneau, PCCP managing director, said in prepared remarks PCCP was pleased to purchase the senior loan and recapitalize The Star, which he called a “quality asset” that stands out among other rental properties in downtown because of its high-end luxury amenities and finishes along with its historic pedigree.
The Star residences feature one- and two-bedroom floorplans ranging from 730 to 1,730 square feet. Most of the units are one-bedroom apartments (72 percent). Provident restored the original brick, terra cotta and limestone façade and ornate limestone arcades during the renovation. In October, the asset was named the Gold winner in the adaptive reuse category of the MHN Excellence Awards.
The building was constructed in 1915 and served as the Texaco headquarters until 1989. It sits on a 1.5-acre parcel and takes up an entire city block. The Main Street and the East-West rail lines are adjacent to the property and accessible on Rusk and Capital streets, offering access to the University of Houston, NRG Stadium, Buffalo Bayou and the Texas Medical District. It is also within two blocks of the Houston tunnel system and a 10-minute walk to the Toyota Center.
Last week, a joint venture between PCCP and The Excelsior Group announced it had purchased the 66-unit Mills Creek apartment community in Maple Grove, Minn., for an undisclosed price. While PCCP acquires and develops properties, it also provides financing for commercial real estate properties, including acquisition and construction loans.
In March, PCCP provided a $49.2 million construction loan for a 458-unit community in Phoenix and a $46 million acquisition loan for a two-building community in Austin, Texas. In January, the company provided a $100.6 million loan to a joint venture to construct a 380-unit community in Charleston, S.C.