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FLOWER MOUND, TX-Dallas-based Direct Development has secured $26.1 million in permanent financing after pulling the plug on a “handshake” agreement for the 322,376-sf Highlands of Flower Mound. Inland Real Estate Corp. held the option, but lost the deal when it asked for an extension, GlobeSt.com is told.

“At the end of the day, it had to do with the interest rates,” explains Syd Hurley, a Direct Development principal. The financing, which closed yesterday, retired a construction loan with Compass Bank that still had a year left on the term. Hurley says the interest rate flux pushed the development group to adhere to a strict timeframe that nipped the sale so financing could still slide in under 6%.

William Ross and Phillip Bankhead, both in the Dallas office for Horsham, PA-based GMAC Commercial Mortgage, arranged the 10-year loan, with a 30-year amortization, at a 5.9% interest rate. Hurley says the loan-to-value ratio was about 75%.

The Highlands of Flower Mound delivered in March at the southwest corner of FM 2499 and FM 407. At yesterday’s closing, it was 97% leased, of which 92% of the tenants have doors open. By month’s end, Zale’s jewelers, Cotton Patch and two “mom and pop” shops will open followed in November by the last signed tenant, Chili’s. David Levinson with the Weitzman Group in Dallas has just two spots to fill: 1,100 sf and 1,400 sf.

Hurley says the center’s quick lease-up is “the perfect storm of real estate deals. You get one of those every seven or eight years.” The tenant mix is a “Who’s Who” of national names, with SuperTarget as the anchor.

The Chicago-based Inland put the asset under contract in early summer after Kimco Realty Corp. of New Hyde Park, NY pulled a bid when recalculations forced the price to rise, Hurley confides. Inland and Direct Development, with David Watson as the other principal, had a “handshake deal” with a friendly deadline to close by the end of September or Oct. 1.

Inland’s offer was “attractive,” but the request for an extension “was unacceptable to us,” Hurley says. “We didn’t want to miss the financing opportunity.” The parting was amicable, with “no hard feelings,” he says, pointing out yesterday’s closing fell on the cutoff date with GE Capital “doing what it said it would do.

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