HOUSTON-A joint venture developer has obtained $22 million in permanent financing for the 308-unit Retreat at City Park. The vehicle replaces a floating-rate construction loan.

Robert LaRue, partner with locally based Live Oak Capital Ltd., tells GlobeSt.com that the original loan was floated in 2001 for the 1640 E. TC Jester Blvd. development and some funds used three years later to build more townhouses right across the street. The borrower is City Park Venture, a joint venture between Allied Realty Services and Baxter Development Corp., both from Houston.

LaRue, who arranged financing through Guardian Life Insurance Co. of America of New York City, explains that it made sense to do the refi due to last summer's prime rate hovering at 7% and the former debt carrying a floating rate. Borrower of record City Park Venture Ltd. ended up with a 10-year loan with a fixed-rate interest of 6.3% and 30-year amortization.

Rather than going for a conduit loan, the borrower opted for a life insurance lender. "Conduits sometimes have some post-closing issues that the lender has to deal with, but a life insurance loan doesn't have the same problem," LaRue says. "On the other hand, the conduit will give you more dollars and a more competitive interest rate so it's a toss-up."

LaRue adds that the JV also wanted a lender that could understand the "Katrina effect"--conditions that drove the multifamily property from just under stabilization to 100% occupancy and back down again within six months. "These guys went from about 85% occupied to a wait list after Katrina," he explains. "But as those tenants returned to Louisiana or found other long-term housing solutions, the property hit a decline. They needed someone who could understand that story." The class A complex was 92% leased at the loan's closing. Local firm Orion Real Estate Services Inc. is the asset manager.