$69M Preston Hollow Condos Land $23M Backer

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DALLAS-Rainier Capital Management LP, making its first investment in residential product, has kicked in $23 million of equity and mezzanine funding for a $69-million development in Preston Hollow.

Rainier Capital executive vice president Tim Nichols tells GlobeSt.com that the $14-million mezz piece, funded at 8% interest, secured a 10% ownership stake and a $9-million equity contribution, with a preferred IR look-back of 12.5%, netted a 30% interest in the 139-unit Drexel Hollow along Turtle Creek Boulevard. The Dallas-based Drexel Development Co. picked up the balance of its funding for the 6.6-acre development from First United Bank in Tulsa and Gramercy Capital in New York City.

Nichols says the developer will begin to scrape the 1940s-era apartment buildings from the land later this month. The replacement product for the Edgemere Road-Turtle Creek acreage will be 10 three-story buildings with condos averaging more than 2,000 sf and an average sale price of $750,000. He says the plan is to deliver the first condos in 15 months, setting up a phased-in play with a four-year sell-out schedule.

Nichols says Trammell Crow Co. introduced Drexel principals Bob Dale and Glen Wiggins to Rainier. “This is our first foray into the residential area,” Nichols says. “We’ve seen a lot of properties, but nothing was down our fairway. This one, we gave a greater look to because of the area and the end product. We’ve got a proven developer and arguably the best location in town.”

Drexel Hollow, with some units hitting 3,000 sf, was designed by Smith Ekblad & Associates Inc. of Dallas. A Drexel affiliate is the general contractor for a development site positioned within a half-mile of Preston Center and NorthPark Mall. “Some of our investors are all over us to get on the waiting list,” Nichols says.