Miller Borrows $7M Plus for Class A Retail Buy

The five-year-old center at 2850 W. FM 518 is situated near top-draw national tenants. "This was a very competitive deal and we went through an intense bid process to get it," says Greg Miller, president of Miller Realty Investment Partners, an affiliate of Dallas-based Henry S. Miller Commercial. The buying group includes HSM Equity Partners, led by president Steve Harris.

Texas' tax laws have all buyers on edge so Miller's not discussing the final price. But based on the loan size, the center's quality and occupancy, with just 1,000 sf to fill, it's a good bet that the price pushed $8.5 million or more.

Miller did tell GlobeSt.com that Miller Realty paid full price for Silverlake Shopping Center, with no discount, but it was well worth it. "There are good tenants in there with all leases renewing at higher rates," he says. Four additional leases are anticipated to roll over in 2008. "They'd signed a lot of five-year leases in 2002. And when those came due, some came in higher than what they were paying before," he explains.

Silverlake's tenant roster includes Bank of America, Sylvan Learning Center and Quiznos. Its neighbors, though, define the area's drawing power: Randall's Food & Drug LLP, Kohl's Corp., Marshall's Stores Inc., Ross Inc., Target Corp., Hobby Lobby Stores Inc., Circuit City Stores Inc. and PetSmart Inc.

Miller Realty also lucked out in obtaining its interest-only loan from the Stamford, CT-based GE Real Estate. During the closing period, Moody's came out with a white paper criticizing aggressive interest-only loans based on pro forma rather than actual loan-to-value amounts. "The market disappeared overnight for full-term, interest-only loans," says Lance Wright, southwest regional manager for GE Real Estate's North America Lending division.

Wright says GE opted to keep the terms offered to Miller Realty because of a long-term relationship, closing the transaction within 25 business days. "I can't do those types of loans any more," Wright says. "They just aren't available in the market at this point in time, but we wanted to honor Miller's application in spite of a very volatile market."

Wright says beyond the lending hurdle there was no problem in funding the deal because it's class A retail in an affluent high-growth area in a high-traffic corridor. "It's one of the busiest areas in the Houston market," he adds.

Henry S. Miller IV, a Dallas broker for Henry S. Miller Commercial, represented Miller Realty Investment Partners. Jennifer Pierson, senior vice president for CB Richard Ellis in Dallas, was the seller's broker. Shawn Ackerman, vice president in the Houston office of Henry S. Miller Commercial, will handle leasing.