HOUSTON-The 511,831-sf Memorial Hermann Medical Plaza, set to break ground any day, is rising with a $117.5-million financing package, spanning more than 17 years with a locked-in, fixed-rate interest of sub-7% and a 78% loan-to-cost ratio. The hospital’s mixed-use building is 33% pre-leased.

The New York City-headquartered Teachers Insurance & Annuity Association and Stamford, CT’s GMAC Commercial Mortgage Corp. bested 10 lenders vying for the hospital project. A pair of Holliday Fenoglio Fowler LP senior managing directors in Houston, Greg Pappas and Scott Galloway, arranged the financing.

Pappas tells GlobeSt.com that the package consists of a 30-month construction period and an immediate roll to a 15-year financing, both at a sub-7% fixed-rate interest. A small portion of the construction capital has a Libor-based floating rate, he adds.

“Although it has fairly high leverage, fairly low leasing, the quality of the site and sponsorship got lenders comfortable and excited about the deal,” Pappas says. The Houston-based Mischer Healthcare Services LLC is handling pre-leasing for office and retail components, co-developing the 28-story building with Memorial Hermann Healthcare System. Aside from the state-of-the-art medical facilities, the project includes a 2,400-space parking garage with a skywalk into the Memorial Hermann Hospital.

The development site at the north entrance to the Texas Medical Center is bordered by Fannin and Main streets and Macgregor Drive. “The site offers one of very few investment opportunities in Houston with true geographic barriers to entry. Rice University is to the west, Hermann Park is to the north and the heart of the TMC is to the south and east,” Pappas says.

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