SPRING, TX-A Northern California trust has received a $3.8-million loan to help with the off-market acquisition of the 27,940-sf Woodlands Green Retail Center. The buyer, who paid far north of $5 million, made the close with a non-recourse, fixed-rate loan with a declining pre-payment penalty and no reserves for tenant improvements or leasing commissions.
Houston developer Peyton Cottrell built Woodlands Green in two phases in 2002 and 2004 at 25919 Interstate 45, pushed occupancy to nearly full and then sold it. "The tenants are small retailers, but what's interesting here is that the California investor is buying this because it has a good location with good infrastructure and an area with strong population growth," says Keith Van Arsdale, director for BMC Capital LP in Houston.
Todd Carlson, an associate with Marcus & Millichap Real Estate Investment Brokerage Co.'s Houston office, says Woodlands Green was the second of two metro assets that the buyer acquired from 1031 exchange proceeds from the sale of a multifamily property in California. In June, the investor bought the 28,453-sf Crossroads II at 902 W. Dallas St., for which BMC arranged a $1.55-million acquisition loan. Carlson and Marcus & Millichap's Don Stringham have brokered the deals.
Van Arsdale tells GlobeSt.com that the buyer needed a loan with a declining prepayment for the Woodlands Green deal, but didn't want a forced reserve for TIs and leasing commissions. "Most conduits require 50 cents to the dollar to be escrowed," he explains. "You get the money back when you pay out commissions, but otherwise it's tied up."
Van Arsdale says a 10-year loan at a fixed rate of less than 6.5% was able to be arranged despite the borrower's stipulations. "In a typical non-resource loan, there's generally a defeasance pre-payment, but that wasn't the case here," he adds. "Now, she can sell the property whenever she wants or get it refinanced without the loan being tied up. This provides maximum flexibility for the borrower."
The loan arranger says a regional portfolio lender funded the deal, which amortizes over 30 years. Van Arsdale says the loan wasn't difficult to place due to the property's location just south of the Woodlands, Interstate 45 at the front door and its age.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.