SUGAR LAND, TX-A San Antonio developer has secured construction financing with a 10-year permanent follow-on loan to buy four acres and build the only hotel earmarked for the 110-acre Crossing at Telfair. The hotel financing hovers $18 million.

Site work has begun for a 203-room Hilton Garden Inn, being developed by Presidian Cos. and underwritten by a 20-year franchise agreement for the flag, according to Gary Dunkum with Houston-based Live Oak Capital Ltd. The hotel is part of the first phase of construction for the Crossing at Telfair, a mixed-use development at the junction of Texas 6 and US Hwy. 90A near the 2,018-acre Telfair community. The six-story hotel will front an interior road, University Boulevard, which has yet to be built. Delivery is penciled for spring 2008.

Presidian acquired the development site from the Crossing's local developer, Weaver, Davis & Jacob Realty Group. The build-out plan calls for more than 700,000 sf of office, medical office, restaurants and retail and includes just one hotel site.

Dunkum arranged debt and equity for the hotel project. Baltimore-based Alex Brown Realty Inc. kicked in more than $3.6 million of equity and American National Insurance Co. of Galveston packaged the debt with a 15-month construction period and an immediate roll to perm after the work's done. The fixed-rate deal includes interest-only payments for the construction period and one year after completion. "They locked in fixed-rate financing for the whole term," he tells GlobeSt.com. "It's in the low 6% and it's going to be there for the whole term."

Dunkum says several lenders presented proposals, but American National Insurance and the borrower had an established relationship spanning 10 years. "They do the deals unless there's a real reason not to," he says. Start to finish, it took four months to ink the financing.

Presidian, founded by Drake Leddy in 1989, is a management firm as well as a developer with several properties in the Houston-Galveston region. The Hilton Garden Inn's design includes 7,000 sf of meeting space and restaurant and bar. And the safety net for success is "it's in the middle of a master-planned, deed-restricted, high-growth market," Dunkum says.