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HOUSTON-The Morgan Group Inc. has replaced construction financing, pegged at $51.6 million to $56 million, with permanent financing on the 295-unit 36Sixty Apartments in the Greenway submarket. The five-year loan from Freddie Mac carries a 5.17% fixed-rate interest.

James S. Adams, senior vice president and branch manager in Houston for Capmark Financial Group Inc., is bound by a confidentiality agreement so some deal details are off limits. He can confirm that the refinance retired the construction loan, but isn’t able to say if the Houston-based developer pulled additional equity from the 95%-leased development at 3660 Richmond Ave. to begin a second phase or possibly another project.

The Morgan Group built the four-story mid-rise building on a 4.3-acre tract ground-leased for the long term from Holly Hall Inc., a local non-profit group. The apartment building was completed in early 2007. Assessed at $37.1 million by Harris County Appraisal District, the complex has one- and two-bedroom units, ranging from 691 sf to 1,478 sf. The monthly rents start at $1,125 and climb to $2,275, according to Internet research.

To make way for the apartment building, the Morgan Group razed a three-story office building. “We’re seeing the trend of tearing down stuff in the inner loop. As the price of land gets more expensive, developers are putting higher and better use on the land,” Adams tells GlobeSt.com. He and Capmark associate producer Andy Hill arranged the Freddie Mac loan.

Adams points out developers are moving toward three- and four-story mid-rise buildings rather than typical garden apartments, especially along Houston’s Interstate 610. The reason is that increasing density helps to save on the construction cost. “This is a fairly new product type for Houston and there are a whole bunch of them under construction in the inner loop,” Adams adds.

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