TODAY’S DEALS: Holliday Fenoglio Fowler Closes Sale of Houston Apartments

HFF has closed the sale of a 318-unit complex in Houston; Grosvenor Investment Management U.S. Inc. commits $93 million; and Johnson Capital closes a Louisiana apartment loan.

Coral Gables Apartments

Houston–Holliday Fenoglio Fowler has closed on the sale of Coral Gables Apartments, a 318-unit complex in southwest Houston. HFF marketed the foreclosed property on behalf of the seller. CG Properties LLC purchased the property for an undisclosed amount using a bank loan as bridge financing.

Coral Gables Apartments is situated on a 13-acre site at 10522 Beechnut, less than a 10 minute drive to Houston’s Westchase District. Units in the complex average 882 square feet.

The HFF team representing the seller included senior managing directors Craig LaFollette, Todd Stewart, Todd Marix, director Tre Banks and associate director Chris Curry. The LS Realty Advisors team that represented the buyer included David Fantin and Heidi Castiglione.

Grosvenor Investment commits $93M in public pension capital for apartments

New York–Grosvenor Investment Management U.S. Inc. (GIM) committed approximately $93 million to fund development of five multifamily communities with a total of 1,197 rental apartments. These projects include two highly visible developments in New York City with a total of 405 apartments.

In its latest closing on behalf of a domestic public pension fund, GIM provided $6.9 million in participating mezzanine financing for the development of 288 workforce rental apartments in San Antonio, Texas. This project, Vantage at Kitty Hawk, is being developed by an affiliate of American Opportunity for Housing Inc. (AOH), and is the third such project that AOH has developed with GIM financing. The other two are in the Texas communities of San Marcos and Kyle.

“With the three Vantage projects, totaling 792 units, and two New York buildings, totaling 405 units, GIM has become increasingly focused on multifamily housing development in both primary and secondary markets,” says Robert Kilroy, managing director at GIM. “Multifamily investing in the US has provided investors with outstanding returns on an absolute basis and also in comparison to other property types.”

Speaking of the Vantage developments, GIM Director John Gaghan says: “Throughout the U.S., demand is strong for workforce housing, which usually leases up quickly and has high resident retention rates. In recent years, most new multifamily development has focused on the luxury sector, despite the fact that there is significant unmet demand at lower price points. We are pleased to be working with AOH, which has a strong track record in workforce housing development in Texas.”

Both affordable and luxury rental housing opportunities as well as retail and community uses will be offered by the two GIM-financed apartment buildings in New York City, currently under development by The Dermot Company Inc. of New York City.

In a public-private partnership, Dermot and GIM are developing a mixed-use property on Manhattan’s Lower East Side that will include 78 mixed-income rental apartments and a new 30,000 square foot headquarters for The Lower Eastside Girls Club. GIM provided $6.4 million in joint venture equity capital on behalf of a public pension fund. Additional financing came from the city in the form of tax-exempt bond financing and subsidy loans; New Markets Tax Credit financing was provided by Bank of America, Carver Bank, and JP Morgan Chase. The 12-story building on Avenue D will have 4,700 square feet of onsite retail space as well as a gym,  and a rooftop deck. Ground was broken in June 2010 and the project is expected to be completed by May 2012.

Across the East River in Brooklyn’s BAM Cultural District, Dermot and GIM are partnering on development of a 42-story, 457-foot-tall tower called 29 Flatbush with 327 rental apartments (20 percent of which will be designated affordable), 7,600 square feet of retail space, and a 200-car parking garage. GIM, on behalf of a public pension fund, provided $68.9 million in equity capital. In addition, the New York State Housing Finance Agency issued $90 million in tax-exempt bonds with credit enhancement and administration provided by Bank of America and Capital One. Following a December 2010 groundbreaking, this landmark structure is expected to be completed by December 2012.

“We predict continuation of the US multifamily sector’s strong performance, with even better opportunities in the next five years due to rising demand for rental housing along with weak supply, deteriorating home ownership rates and changing demographics,” said Kilroy. “These trends should provide investors with very good returns, as long as risk is balanced. GIM plans to continue seeking development and acquisition opportunities in all types of multifamily housing, from affordable to luxury, including renovation and repositioning of distressed properties.”

Johnson Capital closes Louisiana apartment loan

Houma, La.—Johnson Capital’s Midwest Multifamily Lending Group has secured the financing of a garden apartment complex in Houma, Terrebonne Parish, La., through a correspondent relationship with Fannie Mae DUS lender. Director Adam Klingher closed the deal.

The borrower was a local investor. In refinancing his current bank loan the borrower was able to lower his rate while putting the property on a long term fixed rate loan at 4.82 percent.

“The borrower on this property was able to get a great long term loan at near historically low rates,” Klingher says. “Many people think borrowers in smaller communities such as Houma can’t find long term financing. However, it is possible for borrowers in these markets to access the capital markets and obtain a low rate long term financing. It just takes some patience and focus on finding the right lender.”

The property is a 208-unit garden-style apartment complex comprised of 12, two-story buildings containing 64 one-bedroom units, 128 two-bedroom units and 16 three-bedroom units. There are two swimming pools, an office center, laundry facilities and a 75-unit self storage facility. Most units were substantially upgraded over the last few years.

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